From Tech Crunch by Anita Ramaswamy

Tux Pacific isn’t your average tech founder. They’re a self-taught cryptographer who dropped out of college, a proud member of and advocate for the transgender community and a self-described anti-capitalist anarchist who believes in free-market principles deeply rooted in the early days of crypto, when Bitcoin reigned supreme and banks had no interest in the sector.

Pacific’s radically different background in comparison to other entrepreneurs is precisely what informs their unique way of thinking, they told TechCrunch in an interview. Pacific founded and serves as CEO of Entropy, a decentralized crypto custodian that says it has raised $25 million for its seed round led by Andreessen Horowitz alongside Coinbase Ventures, Robot Ventures, Dragonfly Capital, Ethereal Ventures, Variant and Inflection. Prominent angel investors from the tech community, including Naval Ravikant, Sabrina Hahn and James Prestwich, also participated in the round, according to Entropy. This latest round follows the company’s $1.95 million pre-seed raise in January.

The Brooklyn, New York-based startup is aiming to disrupt the way digital assets are held through its decentralized self-custody solution, according to Pacific. Before founding Entropy last year, Pacific worked at cryptography network NuCypher while living in Berlin, Germany, where they learned advanced cryptographic techniques.

In the status quo, large crypto custodians like Fireblocks, Coinbase and Anchorage Digital that hold assets for crypto users are fundamentally centralized and function in a similar way to banks. In some cases, holding users’ private keys in a central location has left these custodians vulnerable to hacks, and their users can’t always interact with their funds at their will.

“We’ve heard a number of stories that were always like, we’ve used people like Coinbase, or we’ve used like all these other custody solutions. They call them up, and they’re like, hey — we need to move funds. And [the custodian responds], oh, sorry, we have to wait to get a person to do that,” Pacific said. They recounted one anecdote they’d heard about a fund that was poised to lose several billion dollars in an OTC transfer because their point of contact at the custodial firm was on vacation.

Entropy, in contrast, leverages cryptographic techniques based on multiparty computation to give users a way to deposit and use cryptocurrencies across any blockchain, at any time, Pacific explained. Using Entropy’s protocol, users can implement their own rules for interacting with the funds, such as time-gated constraints — a particularly useful feature for groups like DAOs that are trying to make decisions around a collectively determined set of rules, Pacific said.

Pacific describes Entropy’s solution as comparable to Google Authenticator in that it doesn’t provide its own wallet or user-facing products — it simply handles the process of “signing” their data cryptographically. Other groups, including companies and DAOs, can then use Entropy to deposit user funds for safekeeping but aren’t beholden to a centralized custodian’s constraints.

Most cryptographers start with a protocol, and then envision a user experience that fits around it, Pacific said. In the case of Entropy, Pacific conceived of the idea by reversing that process — thinking about what the ideal custody experience would look like for a crypto user, and then designing the Entropy protocol to fit that.

“I’m approaching the problem so differently from a lot of other people … There are competitors who are just building wallets and just trying to fit their cryptographic protocols that they’ve come up with to do this thing. [My perspective is that] all the other people who built these cryptographic protocols before me, there’s nothing super novel about them. I’m just going to compose it radically different than they are and just make it super user-friendly,” Pacific said.

Pacific also attributes Entropy’s edge to their own willingness to deviate from the traditional business model for custodians, wherein users pay them a fee to safekeep funds and to work toward finding a model that can generate revenue not just for the custodian but also for the protocol itself, as well as crypto users. They readily admit Entropy’s team of nine people hasn’t worked out the details of that model just yet, but the company’s venture backers don’t seem to mind.

“When we started raising money, one of the biggest things I started telling people is that we don’t have a business model,” Pacific said. They are, as is typical of early-stage startups, focusing on building a great product before thinking through monetization, Pacific said.

Entropy is also going after a different audience than typical custodians might, Pacific added.

“This isn’t like some enterprise blockchain like Qredo,” Pacific said of the other decentralized digital asset custodian, which, unlike Entropy, provides users with a wallet. “We’re building a product that’s uniquely for crypto-native people and decentralized institutions. We don’t expect JPMorgan to use us,” Pacific said.

Entropy’s focus on serving individual, crypto-native users in some ways comes from Pacific’s personal connection to the crypto community. While they said they have faced some pushback for being a trans founder, for the most part, they’ve found crypto to be an unusually supportive environment.

“In fact, I’ve never felt I’ve been in a space where it’s been more acceptable for people to be so different. If you go to a [crypto] conference, it’s just filled with weird, weird people,” Pacific said.

Pacific is used to forging their own path, they said, recounting how they didn’t have any role models they could relate to growing up. Today, there is still almost no research on LGBTQ+ founders and how they’re funded, though VC firm Backstage Capital estimates they receive less than 1% of venture dollars overall.

“Being able to see trans entrepreneurs would have been such a huge thing for me as a kid, especially trans people who are entrepreneurs who hold similar political values,” Pacific said.

Comments

anon (not verified) Sat, 06/11/2022 - 15:58

Yeah, who fucking cares? Unless they're gonna take the money and run this is just the stupidest shit ever.
Fuck crypto and fuck $€£¥

c4$$ (not verified) Sat, 06/11/2022 - 17:13

In reply to by anon (not verified)

who cares? anarchists who aren’t afraid to think big and be successful! this is an encouraging precedent! broke-ass player haters gonna hate instead of focusing in the hustle and the grindset. you attract what you put out. focus on positivity, prosperity and abundance. peace

anon (not verified) Sun, 06/12/2022 - 14:21

In reply to by c4$$ (not verified)

"anarchists who aren’t afraid to think big and be successful! "

... in the context of a hyper-capitalist, social media driven world. yeah, thinking really big.

Johnny (not verified) Sat, 06/11/2022 - 17:20

In reply to by anon (not verified)

Nice self-initiate from transdude, he is working within the machinery of Leviathan to carve out his own liberation, and will most likely procure a TAZ, or PAZ on which to create and invent anarchic forms of existence.

J (not verified) Sat, 06/11/2022 - 17:42

"anti-capitalist anarchist who believes in free-market principles"

I call that a capitalist and not an anarchist. Shouldn't be on this site.

anon (not verified) Sun, 06/12/2022 - 04:41

Because they/she/it are Trans this makes all the difference! It's no longer ancap techie yuppies, but progressive superbrilliant and edgy LGBTQ+ comrades. And all the data-miningcenters sucking incredible amounts of electricity and water are rainbow-colored, so all good by Instagram standards.

anon (not verified) Sun, 06/12/2022 - 06:04

In reply to by anon (not verified)

Yeah good point, though I couldn't help but notice that you seem confused about what pronouns this person uses. One easy strategy I've found to determine what pronouns to use would be to notice what pronouns are being used. In this article, it looks like they/them/theirs are the pronouns used for/by this person, and I didn't see she or it used at any point. I understand this can be really difficult and tricky to figure out, so just thought I'd offer a useful tip!

Le Way, (not verified) Sun, 06/12/2022 - 15:39

In reply to by anon (not verified)

Oh just give the kid a break and let him mature into a more nuanced and appropriate anarch mode which he can adapt to during the course of his creative and emotional evolution.
Anarchs aren't just born overnight like leftists, or obey stern lecturing or indoctrination they are forged and carved through experience and exposure to the rigors of following an authentic path and not ideologically controlled methodologies.

anon (not verified) Sun, 06/12/2022 - 22:32

In reply to by anon (not verified)

The person who wrote this article is not trans. cis people write cringe shit about us and it just makes people hate us. I wish they would die. You think you hate this? we hate this more

anon (not verified) Tue, 06/14/2022 - 03:53

In reply to by anon (not verified)

Tell me plz why sre there so FEW trans men in positions of administrative power in the US, UK and Canada? Or why is trans being so much represented by males changing for women binary gender identity?

Is it really coz socio-politically men are so much in a deprecated position?

Likely the polar opposite...

Ben Dover (not verified) Mon, 06/13/2022 - 19:00

Maybe I don’t get it, but people (even marginalized ones) engaged in organizing and developing (crypto based) capitalism doesn’t seem like an anarchist thing to do. Hacking into a (crypto) bank and spreading the money around might be. And being trans doesn’t mean someone is just a victim of history…some trans individuals have been part of building the Leviathan too and continue to do so. Today there are trans who are billionaires, Hollywood moguls, cops, homophobes, racists, a US military general…. It isn’t magic fairy dust that makes one just an innocent victim in every circumstance or inherently radical, especially whites from the global north…so just because it’s a trans person doing it doesn’t it make it ok or radical…

anon (not verified) Mon, 06/13/2022 - 19:41

In reply to by Ben Dover (not verified)

"just because it’s a trans person doing it doesn’t it make it ok or radical…"
Oh wow, brilliant conclusion, I'm gonna apply the same reasoning to :---
just because it’s an old whiteperson doing it doesn’t it make it ok or radical…
Also, ---Just 'cos its indigenous,
Just cos its Muhrican,
Just cos its redneck,
Just cos its a schizophrenic,
Just cos its a refugee, etc etc

anon (not verified) Tue, 06/14/2022 - 03:57

In reply to by anon (not verified)

Funny how you're putting Muhricans and rednecks on a same level of repressed groups like schizoprenics and refugees, anon 19:41.

Think harder next time, fash troll.

anon (not verified) Tue, 06/14/2022 - 04:46

In reply to by anon (not verified)

U think harder instead. Consider the last decade of the identarian woke narrative. Every minority is now in an identity group consciousness which has replaced the former class consciousness but still retains all the ressentiment of its forebearers.
Noticed how rednecks are now flipping back to their European ancestors cultural heritage as a type of competition to indigenous cultural tradition? Notice how refugees all become restaurant owning bourgeoisie exhibiting their traditional menu and expressing their roots to the land their ancestors migrated from. Awkward I must say for traditionalists to continue with their divisive territorial rhetoric when they are on the opposite side of the planet to where their roots are at! w/e
I put most folk on the same level of stupidity, I don't favor one moron over another.;)

anon (not verified) Tue, 06/14/2022 - 08:18

In reply to by anon (not verified)

"Notice how refugees all become restaurant owning bourgeoisie"

What world do you live in, 04:46? You deluded piece of shit.

"I put most folk on the same level of stupidity,"

Oh my, it thinks it's not the stupid one. LOL

anon (not verified) Mon, 06/13/2022 - 22:15

In reply to by Ben Dover (not verified)

When you think about, the only people who aren't willing participants and users of capitalist produced objects, food and medicine are the 2 or 3 thousand naked indigenous tribal folk still living in a traditional way?

anon (not verified) Mon, 06/13/2022 - 23:28

In reply to by anon (not verified)

Sooo, what are you actually saying? That naked primitive indigenous are the only real anarchists or that all anarchists are no different to millionaire TransCryptoBoy? You saying anarchism is an attitude, a mental perspective, that's all?
All that someone has to do is declare they are an anarchist, and they will start to act like anarchists? Interesting.

anon (not verified) Tue, 06/14/2022 - 01:42

In reply to by anon (not verified)

Settle down brah, no big drama, I'm proposing that the material commercial status of anyone is irrelevant to what they actually do to the whole space of their influence and in their relationship with those they contact, which is the essential quality sought in pursuing anarchic experiences.

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