Why we built Ember Fund
Our journey begins almost 9 months ago. We were all working at an artificial intelligence company, and although we all came from very different backgrounds, we got along really well. Crypto brought us all together and consumed much of what we talked about at lunch and at the bars after work. At the time, crypto was running up like nothing we’d ever seen before. Everyone was talking about it, and everyone was an expert. “The CBOE launch is going to create buy-side demand!” “IOTA is going to be the future!”. It was exciting times.
Then the market started tanking and the talk slowly subsided. The “experts” faded away. The market lost 80% of its value and a lot of people lost a ton of money. I kept thinking about the “HODL” meme that seemingly became the hallmark of crypto investing. In the stock market, it seemed like common knowledge to just “think long-term” or “buy and hold” and although it was common knowledge to “hodl” in the crypto world, no one was doing it. Instead, “pick individual crappy coins” and “buy high sell low” seemed to be the reality of things.
It’s unfortunate that so many people bought into the notion that cryptocurrency prices would keep rising. You hear stories about people mortgaging their homes to buy crypto, but I had always believed that the right way to do it for most people is to just invest 1% or less of your liquid net worth and hold a few of the top coins. Most retail investors were doing the complete opposite, including some of us at the office.
I kept thinking, I just want to buy an index of coins and just let it ride. Someone must have built the S&P 500 or Dow Jones of cryptocurrencies, right? It seemed binary to me, either crypto would go 100x or it would go to nothing. Either way, from an investment perspective it seemed reasonable to get some exposure to crypto in some way, and index investing seemed like the best way to do it. Just buy a basket of coins that cover the market and hold. Most of us simply don’t have the time or desire to spend 20–40 hours a week following the markets. I searched for a product to easily do this but found that it didn’t exist….
“How the hell did this not exist?”
I searched for hours and couldn’t find anything. During my research, I found that for custodial solutions (like Coinbase) with USD to BTC exchanges, there is a dizzying amount of legal compliance to adhere to: KYC, AML, MSB, Money Transmitter Licensing, etc. Moreover, it seemed like agencies that were responsible for giving guidance on legality were hopelessly confused about it. The IRS calls it “property”, the CFTC calls it a commodity; to the SEC, it’s a security. It was impossible to build a product like this unless you had millions in the bank to navigate the legal framework of this new asset class. It seemed that giving retail investors access to a low minimum crypto index fund was the holy grail of the industry but no one had figured it out yet. There are existing crypto index funds but they require you to be an accredited investor with $1 million in the bank or make $200,000+ a year. Others are more accessible but take custody of your assets. To me, this goes against everything crypto stands for. Essentially you have centralized institutions making the wealthy even wealthier, holding onto your assets, and telling you when and how you can access them.
“What if we could provide an amazing user experience that allowed users to maintain their own assets and have low minimums ($100 vs $50,000)?”
We were determined to find out if this was technically and legally possible. After countless hours of research and chatting with a few industry veterans…
We found the solution.
The answer we found was to be non-custodial, meaning we don’t have access to user funds. To do this, we had to create wallets and do client side encryption (fancy way of saying we don’t have access to any passwords or keys). We found a way to do it all through the technology we built and integrated. The user experience would feel seamless and all the complexities of searching multiple exchanges and executing the order at the best price, lighting up wallets, private key management would all be taken care of, in the background. The user would just deposit bitcoin (or connect their Coinbase account) and see their diversified portfolio magically created. And most importantly, unlike all solutions out there right now, neither Ember nor any third party would ever have access to it.
We all bought into this vision and spent nights and weekends building it. It was hard but we made it. We sacrificed a lot but we’ve made it and we’re damn proud of what we built.
TLDR: We’ve built the first Apple Store approved mobile app in the world that allows you to buy a diversified portfolio of cryptocurrencies and retain custody of your assets, all with 1-click.
