Zero-knowledge proofs developer Proven today announced it has raised $15.8 million in seed funding for its “Proof of Solvency” solution that enables crypto industry businesses to prove their crypto holdings transparently.

The round was led by Framework Ventures, which focuses on blockchain technology and decentralized finance, with additional investment from Balaji Srinivasan, Roger Chen and Ada Yeo.

Proven’s technology helps companies show that they are being truthful about their crypto holdings to auditors and customers through what is known as zero-knowledge proofs. This method uses cryptography to show that the underlying data is true to the source without revealing any additional confidential data to the verifier so that it can be audited transparently.

In this manner, Proven helps crypto exchanges, stablecoin issuers, asset managers and custodians prove that theyre solvent to customers, lenders and regulators on whatever schedule they need. Audits can be performed on their balance sheets without needing to disclose them or any other sensitive information publicly.

Although most proof-of-reserves systems display only a bare minimum of a company’s assets, and potentially without revealing how the numbers were audited, Proven’s technology helps firms show both assets and liabilities.

“We designed Proven to be a win-win solution that enables customers and regulators to have confidence in their exchanges, lenders, asset managers and stablecoins while at the same time protecting sensitive customer information,” said Proven co-founder Richard Dewey. “We have received incredible support from many of the established participants in the crypto ecosystem and are looking forward to onboarding many more firms in the coming weeks.”

The crypto industry has been rocked repeatedly by companies misusing customer funds and having potentially poorly audited holdings. That became especially obvious after the catastrophic collapse and bankruptcy of FTX Holdings Ltd. and its sister company Alameda Research, which happened after it was revealed that the two companies were allegedly cooking the books.

“The last few months have highlighted an issue that has long plagued both traditional financial and digital asset firms – efficiently fostering trust with customers while maintaining a necessary level of privacy,” said Dewey. “The absence of this has led to significant distrust and, of course, contagion.”

As one of the largest publicly traded cryptocurrency exchanges, Coinbase Global Inc. is audited by the giant accounting firm Deloitte Touche Ltd. to provide proof of reserves and liability. However, Deloitte and the other big four accounting firms are hesitant to provide services to private crypto firms. To bridge this gap, Proven claims, its technology will help provide trust for auditors and regulators in the industry.

The team at Proven includes a number of veteran quantitative traders and portfolio managers who hail from upscale organizations such as Jane Street, Pacific Investment Management Company, Two Sigma and Elm Partners. They bring their first-hand experience with navigating audits and understanding customer and regulator concerns involving asset transparency and risk, the company said.

Proven currently works with several crypto firms, including the crypto exchange Bitso, the stablecoin TrueUSD and the crypto credit solution M11 Credit as pilot partners. It’s working with them to establish trust with their customers to provide proof of their holdings and liabilities using its technology.

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