FinanceFeeds Podcast Ep.#15: Cogni’s Simon Grunfeld on FDIC-insured Crypto app

Rick Steves

The FinanceFeeds Podcast has returned for its 15th episode with our Editor-in-Chief Nikolai Isayev exchanging insight with Simon Grunfeld, Head of Web3 of Cogni.

Simon Grunfeld is known within the FX industry as the founder of Gallant FX, a PaaS world leader in Forex trading technologies serving both retail and institutional clients. He left the FX business in 2010 when the Dodd-Frank bill was introduced and put into effect in the United States.

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He then ventured into the world of digital assets, first as the founder of OTC crypto solutions for five years before joining Apifiny, a blockchain pioneer, which was the first platform to tokenize real world assets (RWA) and do something with collectible items even before NFTs.

During the COVID-19 lockdowns, he worked as a Senior Consultant of NFT platform, VeVe, and played the role of VP of Crypto at SIMBA Chain earlier this year to help them with token issuance and file a patent for issuance compliant with the US law.

It was in July 2022 that Simon Grunfeld was appointed Head of Web3 at Cogni, the NY-based digital bank that provides easy access to Web2 and Web3 services across traditional finance, crypto, NFT’S, gaming and the metaverse.

Cogni addresses fears in the aftermath of ‘crypto winter’

The expression “bridging the gap” was the first topic to be discussed as Grunfeld pointed out the immense vagueness of the assertion frequently used by firms within the ecosystem – “What are you bridging exactly?” – and the lack of problem solving. “Sounds really good in theory but in practice you’re causing more problems than what you had to begin with”.

Cogni, on the other hand, is truly addressing an issue faced by the millions of crypto users that stay awake at night out of fear that their centralized platforms could be next in the string of bankruptcies affecting the digital asset space, and not being able to withdraw their hard-earned cash or digital assets.

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The words “not your keys, not your crypto” are taken to heart at Cogni. “We are bridging the gap between Web2 and Web3 from a banking perspective in a sense that Cogni is rolling out the very first non-custodial crypto wallet and banking app”, said Grunfeld. “It’s part of your banking experience to custody crypto, send and receive crypto in your wallet, where you – not Cogni – but you, the user, own the keys. If you don’t like our app for whatever reason, take those keys to another wallet. We have no control over that”.

“We don’t need users to trust us”

What makes Cogni completely different from all the platforms that have gone under – FTX, Voyager, Celsius Network, etc – is that every single dollar that is deposited by users is FDIC insured. This can only be done with a banking license.

“We don’t need users to trust us because you’re in full control of your crypto and your fiat deposits are FDIC insured”, he continued. “If we decided tomorrow to go belly up for whatever reason, you’re gonna get your money back and your assets are yours to move wherever you want to move them.

“This is true bridging between Web2 and Web3: the security you have with the FDIC and the knowledge that we can’t hold on to your crypto. It’s yours and yours alone.”

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The lifestyle-focused digital banking platform has already undergone the first phase of product releases and is now preparing phase 2, which will be rolled out in Q2 2023 to expand support to a number of blockchain EVMs, including Bitcoin, Ethereum, and Solana.

CeFi platforms offer non-deliverible products like CFDs. Cogni delivers the crypto

Cogni and its FDIC-insured banking app is a completely different ball game than centralized platforms. One key difference is that CeFi products are non-deliverable digital assets – much like contracts-for-difference (CFDs) – which means that there is no delivery of crypto assets. In other words, “if they go belly up…good luck!”, he reiterated. “If you buy through Cogni, it’s yours. It doesn’t belong to us.”

Grunfeld also pointed to a unique solution on the fiat side of the operation. “Show me a platform that is providing FDIC backing to deposits. There’s only one to my knowledge. Nobody else can do so and for good reason. They’re speculating with your funds. We don’t do that. We’re a banking platform”, he explained, reminding Nikolai that he has worked a lot with centralized platforms and understands the loopholes that platform providers use to manipulate their users. Cogni, however, has taken an approach where it doesn’t need users’ trust. “We don’t have access to your money.”

Lifestyle, carbon footprint, sports

Cogni’s unique value proposition doesn’t stop at non-custodial crypto services with FDIC-insured deposits. The platform provides tools and utilities that make life interesting and also raises awareness of carbon emissions by helping users to understand the carbon footprint associated with their daily spending. Carbon credits, however, are not in the roadmap because of trust issues. Until regulators start taking action, anyone can easily set up a carbon credit shop and fraudulently claim they are providing true carbon credits, he admitted. “I’m not saying they’re all crooks, but there are a lot of crooks”. As a side note, he reminded that the crypto ecosystem has been a pioneer of the green transition. Ethereum’s move from proof of work (PoW) to proof of stake (PoS), which has drastically reduced overload by 99%, is a solid example of that.

As to its lifestyle vocation, Cogni has already garnered interest from large brands and is bringing them to its ecosystem so they can create NFT drops for users and build communities with exclusive access and experiences.

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An example of that is a partnership with sports college platform, Campus Legends, with the intent of catering to college athletes looking to build their fan base ahead of a potential professional career in the big leagues.

Cogni holds the future KYC standard for Web3 firms

Grunfeld is awaiting rules and regulations to set in. Once they do, the laissez-faire days within the crypto space will be over, KYC/AML requirements will be all over the place, and firms will face a critical problem: “How do I verify users?”

Cogni has the solution: the ‘Passport’ – a KYC standard that “bridges the finesse of Web2 KYC with the portability of Web3”.

The ‘Passport’ addresses firms’ need of knowing who they are catering to within the complex world of Web3 and in a compliant way. So how can it be done? “The more you use your wallet, the more I can learn about your interactions”, he said, pointing out to new platforms that operate as a VPN or proxy. which can record interactions and build out the user profile, thus allowing Web3 firms to better cater to users.

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So what makes Cogni different? “When you open an account with us you’re effectively opening a bank account”, he said, adding that the platform tracks user behavior through a non-transferable token – also known as soulbound token – which can’t be removed from the wallet.

This token allows Web3 platforms to confirm that a certain wallet is approved by Cogni. And in the event they need a copy of that information, they can pull it using the Cogni KYC standard. Information is encrypted and put on the chain, instead of being kept on a centralized database. This ensures protection in the event of a security breach.

The interview with Simon Grunfeld also covered how his passion for NY Yankees hats nearly got him in trouble in a Boston restaurant, as well as the international incident that is the collapse of FTX and the lessons learned from that, which always brings back to a completely hands-off model that follows the motto “not your keys, not your crypto.”

Sponsorship opportunities on FinanceFeeds Podcast

FinanceFeeds is the premier independent real-time news source for the FX and CFD trading industry, fintech, and the wider finance community. The podcast series opens up new sponsorship opportunities for companies looking to tap into our niche audience. For more information, please email us at [email protected].

All previous episodes of the FinanceFeeds Podcast are available on all popular streaming audio platforms.

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