• Cloudwall Capital seeks to become “the critical arbiter of risk and insight for institutional investors”
  • Firm to use capital from $6.3 million fundraise to build digital asset portfolio management platform designed for institutions

A crypto risk management startup founded by former Morgan Stanley executives is looking to help institutions enter the crypto space fresh off its seed funding round. 

Founded last year by Kyle Downey, Jia Yng Wee and Ilya Kulyatin, Cloudwall Capital hopes to bridge the traditional finance world with digital assets and decentralized finance through its Serenity offering. 

Downey, who is Cloudwall’s CEO, previously served as the global head of automated risk trading and quantitative investment strategies IT at Morgan Stanley, where he worked for 17 years. He had worked as an analyst at Goldman Sachs earlier in his career.

Cloudwall Capital’s New York team, including co-founders Kyle Downey and Ilya Kulyatin (second and third from left)

Studying and trading crypto since 2013, Downey said crypto was his “side passion” to his work on Wall Street for nearly a decade.

“I’ve always believed that digital assets would eventually become incorporated into the traditional financial system and be adopted by institutional investors,” he told Blockworks. “After the ‘summer of DeFi’ in 2020, the process accelerated, and as we emerged from the pandemic in 2021, I realized I had to move.”

Wee was most recently the head of business management at Tokyo-based financial services company Nomura for five years. Prior to that, she was head of operations at private bank Coutts, as well as at Morgan Stanley, and spent about two years at Deutsche Bank as a business area controller. 

Kulyatin, who leads Cloudwall’s research, is a former fintech founder and has more than a decade of quant research experience in hedge funds, asset management and market-making.

“We have all faced off with trading desks, quant analysts and portfolio managers in the past and know what they need and expect,” Downey said. “It’s a much higher bar than a lot of what has been built for retail traders.” 

Cloudwall’s $6.3 million in seed funding, which the company revealed on Wednesday, was led by LocalGlobe and Illuminate Financial. Other investors in the round included IA Capital Partners, Eberg Capital and NEMO Ventures. 

The capital will go toward building cloud-based platform Serenity, which will allow investors to pull in their portfolios and access historical data from centralized exchanges and blockchains. Its statistical and machine-learning algorithms will also enable institutions to run simulations and stress tests on their portfolios to see how they will behave.

While such platforms and services exist in traditional finance — such as Moody’s Analytics and BlackRock’s Aladdin — such offerings are scarce in the digital assets space, executives said.

The next wave of hedge fund managers and asset managers entering the crypto space will be coming from the traditional finance world rather than from Silicon Valley, Downey argued. They will carry with them an understanding around the importance of risk management, which will help the crypto space mature, he added. 

“We believe a solution that can help manage digital asset risks will bring trillions of dollars in institutional funds to the blockchain,” Downey said.

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  • Ben Strack is a Denver-based reporter covering macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local newspapers on Long Island. He graduated from the University of Maryland with a degree in journalism. Contact Ben via email at [email protected]