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XCryptocurrency IRA Firms Are Springing Up Around Los Angeles

Despite a rattled market and an uncertain regulatory future, cryptocurrencies continue to entrench themselves further in the mainstream. Now, the digital asset class has found relevancy in a new investment market: self-directed individual retirement accounts, or IRAs. And Los Angeles has quickly established itself as an epicenter of the crypto IRA industry.
Self-directed IRAs have long allowed investors to put their money into alternative assets such as gold, silver, platinum and palladium: minerals that are tangible, and stored securely by banks and financial institutions. But cryptocurrencies—which are essentially pieces of data that are authenticated and tracked on digital ledgers known as blockchains—are considerably different. Yet despite their decentralized, inherently riskier nature, that hasn’t stopped investors from pouring their retirement savings into crypto—giving rise to a cadre of new players seeking to manage such funds.
There are a handful of firms in the L.A. area focused on selling self-directed IRAs with a crypto focus, including Sherman Oaks-based Bitcoin IRA; Burbank-based BitIRA; Woodland Hills-based CoinIRA; and Beverly Hills-based Regal Assets, which is largely focused on metal commodities but sets up crypto IRAs for its wealthy client list.
Most notably, Long Beach-based iTrustCapital raised $125 million in Series A funding last month from New York-based Left Lane Capital. The raise gave iTrustCapital an eye-popping $1.3 billion unicorn valuation some four years after its launch, as well as the capital needed to continue its prolific growth.
With more than 150 employees and operations scattered across the South Bay and Irvine, as well as Salt Lake City, iTrustCapital could double in size by the end of 2022, company CEO Todd Southwick told dot.LA. It plans to use the new funding to build out its regulatory and compliance teams, pursue acquisitions and up its marketing budget.
iTrustCapital now holds roughly $2 billion in assets under custody and 27,000 client-funded accounts, with an average size of $55,000 per account. The startup said it has more than doubled its total transaction volume in the last six months alone, to more than $4.5 billion.
iTrustCapital CEO Todd Southwick.
Courtesy of iTrustCapital
Southwick maintains that iTrustCapital is profitable with revenues of less than $50 million in 2021, thanks in part to a pandemic that drove growth in the crypto market. A Series B raise could follow in 2022, though the timing has yet to be decided. “You’re either going to exit via acquisition or go public—I don’t have a preference,” he said.
iTrustCapital’s competitors include Nashville-based Alto Solutions, which is also a self-directed IRA platform and raised $40 million in a Series B round in January. “I think it’s a two-horse race right now [between Alto and iTrustCapital],” Alto founder and CEO Eric Satz said, discounting some of the smaller players active in crypto IRAs.
Like iTrustCapital, Alto also launched in 2018 and plans to use its new funding to grow its operations (Satz said it’s aiming to more than double its 50-person product and engineering team by the end of 2022). The firm currently serves more than 15,000 IRA investors and holds $1 billion of assets under custody.
Bitcoin IRA co-founder and COO Chris Kline.
Sherman Oaks-based Bitcoin IRA, meanwhile, recently expanded its crypto offerings to focus on digital tokens with a market capitalization greater than $200 million—including Cardano (ADA) and Solana (SOL)—and to provide its clients with more options to hedge against market fluctuations, according to co-founder and COO Chris Kline.
“At the end of the day, the crypto industry is growing up,” Kline told dot.LA. “More and more clients are looking for options.” Bitcoin IRA’s strategy is to embrace “legitimate players” offering digital assets with larger market caps, Kline said, in order to avoid potential pitfalls in the market.
As an example, he pointed to the Securities and Exchange Commission’s December 2020 complaint against Ripple Labs and two of the crypto firm’s executives. The SEC alleged that Ripple raised more than $1.3 billion through an unregistered securities offering—the securities being Ripple’s XRP crypto token.
“You don’t want to be putting a coin in [an account] that could basically not be able to be sold at some point,” Kline said. “We’ve dealt with that—with things like what happened at Ripple at the end of 2020, and with the SEC basically making us tell our clients, ‘Hey, this asset may not be liquid again in the future. Beware.’ And a lot of them sold it off, some held it and they’re waiting to see what happens.”
As a result, not everyone is jumping on the crypto IRA bandwagon. Noticeably absent from the market are popular brokerages like Robinhood, E-Trade and TD Ameritrade—though Ameritrade has made overtures indicating that it could dip its toe in the crypto IRA market, according to sources interviewed.
“We are always monitoring and evaluating new products developing in the space, but we don’t have any specific plans to share at this time,” a TD Ameritrade spokesperson told dot.LA.
As more investors gravitate toward cryptocurrencies in search of financial gains, it makes sense that the sector continues to diversify its investment offerings. But for some who are responsible for clients’ savings, the notion of a crypto-focused retirement fund is simply too much risk to bear.
Financial planner Anjali Jariwala, who leads Torrance-based FIT Advisors, told dot.LA that she would be concerned with someone’s decision to use a self-directed IRA to invest in crypto.
“I believe in diversification and prefer IRA-type accounts to be invested in the markets,” she said. “If there is extra money that is in cash or sitting in a brokerage account, that may be used towards more speculative investments like Bitcoin—but I wouldn't try to find a way to invest retirement money.”
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Genies Wants To Help Creators Build ‘Avatar Ecosystems’
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”
The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.
Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.
Similar programs are common in the startup world and in the creator economy. For example, social media companies can use accelerator programs not only to support rising stars but to lure those creators—and their audiences—to the company’s platforms. Genies believes avatars will be a crucial part of the internet’s future and is similarly using its program to encourage creators to launch brands using Genies’ platform.
“I think us being able to work hands on with this next era—this next generation of designers and entrepreneurs—not only gets us a chance to understand how people want to use our platform and tools, but also allows us to nurture those types of creators that are going to exist and continue to build within our ecosystem,” said Allison Sturges, Genies’ head of strategic partnerships.
DIY Collective’s initial cohort will include roughly 15 people, Sturges said. They will spend three weeks at the Genies headquarters, participating in workshops and hearing from CEOs, fashion designers, tattoo artists and speakers from other industries, she added. Genies will provide creatives with funding to build brands and audiences, though Sturges declined to share how much. By the end of the program, participants will be able to sell digital goods through the company’s NFT marketplace, The Warehouse. There, people can buy, sell and trade avatar creations, such as wearable items.
Genies will accept applications for the debut program until Aug. 1. It will kick off on Aug. 8, and previous experience in digital fashion and 3D art development is not required.
Sturges said that the program will teach people “about the tools and capabilities that they will have” through Genies’ platform, as well as “how to think about building their own avatar ecosystem brands and even their own audience.”
Image courtesy of Genies
Founded in 2017, Genies established itself by making avatars for celebrities from Rihanna to Russell Westbrook, who have used the online lookalikes for social media and sponsorship opportunities. The 150-person company, which has raised at least $250 million to date, has secured partnerships with Universal Music Group and Warner Music Group to make avatars for each music label’s entire roster of artists. Former Disney boss Bob Iger joined the company’s board in March.
The company wants to extend avatars to everyone else. Avatars—digital figures that represent an individual—may be the way people interact with each other in the 3D virtual worlds of the metaverse, the much-hyped iteration of the internet where users may one day work, shop and socialize. A company spokesperson previously told dot.LA that Genies has been beta testing avatar creator tools with invite-only users and gives creators “full ownership and commercialization rights” over their creations collecting a 5% transaction fee each time an avatar NFT is sold.
“It's an opportunity for people to build their most expressive and authentic self within this digital era,” Sturges said of avatars.
The company’s call for creators could be a sign that Genies is close to rolling out the Warehouse and its tools publicly. Asked what these avatar tools might look like, the startup went somewhat quiet again.
Allison Sturges said, “I think that's probably something that I'll hold off on sharing. We will be rolling some of this out soon.”
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Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Here's What To Expect At LA Tech Week
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.
The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.
From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.
DoorDash’s Founding Story: Stanley Tang, a cofounder and chief product officer of delivery giant DoorDash, speaks with Pear VC's founding managing partner, Pejman Nozad. They'll discuss how to grow a tech company from seed stage all the way to an initial public offering. Aug. 19 at 10 a.m. to 12 p.m. in Santa Monica.
The Founders Guide to LA: A presentation from dot.LA cofounder and executive chairman Spencer Rascoff, who co-founded Zillow and served as the real estate marketplace firm’s CEO. Aug. 16 from 6 p.m. to 9 p.m. in Brentwood.
Time To Build: Los Angeles: Venture capital firm Andreessen Horowitz (a16z) hosts a discussion on how L.A. can maintain its momentum as one of the fastest-growing tech hubs in the U.S. Featured speakers include a16z general partners Connie Chan and Andrew Chen, as well as Grant Lafontaine, the cofounder and CEO of shopping marketplace Whatnot. Aug. 19 from 2 p.m. to 8 p.m. in Santa Monica.
How to Build Successful Startups in Difficult Industries: Leaders from Southern California’s healthcare and aerospace startups gather for panels and networking opportunities. Hosted by TechStars, the event includes speakers from the U.S. Space Force, NASA Jet Propulsion Lab, Applied VR and University of California Irvine. Aug. 15 from 1 p.m. to 5 p.m. in Culver City.
LA Tech Week Demo Day: Early stage startups from the L.A. area pitch a panel of judges including a16z’s Andrew Chen and Nikita Bier, who co-founded the Facebook-acquired social media app tbh. Inside a room of 100 tech leaders in a Beverly Hills mansion, the pitch contest is run by demo day events platform Stonks and live-in accelerator Launch House. Aug. 17 from 12:30 p.m. to 3 p.m. in Beverly Hills.
Registration information and a full list of LA Tech Week events can be found here.
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- LA Tech Week: 3D Printed Homes, Micromobility and Metaverse - dot.LA ›
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Keylogging Controversy Brings TikTok Back Under US Government Scrutiny
TikTok, the social app that’s so popular that some are using it as a search engine at this point, remains as vital destination as ever for Pink Sauce connoisseurs. Still, the company’s PR headaches continued this week.
Independent research performed by developer Felix Krause found code injected by the social network’s operating system enabling it to monitor all keyboard inputs and tags, even without hitting “submit,” a process known as “keylogging.”
As Krause explained on his blog, this could potentially include recording sensitive information such as passwords and credit card numbers. And because TikTok comes with an internal browser, this functionally gives the app the ability to monitor its users as they browse around third-party websites and services.
TikTok’s certainly not alone in checking out all of your data as you type. A previous post by Krause focused on tracking code within Meta’s Facebook and Instagram iOS apps, allowing them to potentially follow users within in-app browsers as well. A recent survey of the top 100,000 most popular websites found that 1,844 logged an EU user’s email address without their consent, and 2,950 recorded a U.S. user’s email data in some form. The keylogging protocol has also been used as a way for employers to monitor the activity of remote employees.
Though it certainly sounds sinister, keylogging is not necessary by definition malicious. TikTok claims that the code in question is used for “debugging, troubleshooting, and performance monitoring,” and in a statement, a representative denied that the company even collects specific keystroke or text input data. (The company also pointed out similar code in GitHub that’s used for an alternative purpose than keylogging, as a third party example.)
Still, the very mention of privacy concerns and TikTok in the same sentence is enough to raise some eyebrows in the U.S., where the app–which is owned by the Chinese parent company ByteDance–has always operated under a dark cloud of suspicion. Allegations in 2019 that the app was hoovering up data from underage users and censoring content on behalf of China’s ruling Communist Party led to calls for investigations from high-profile politicians. In December of that year, just as TikTok was taking over as the world’s most downloaded app, the U.S. Department of Defense was recommending that all military personnel delete it from their phones.
In 2020, President Trump signed a series of executive orders banning U.S. companies from doing business with TikTok (as well as the Chinese-owned WeChat app). These orders were later reversed by the Biden administration, which nonetheless urged Americans handling sensitive information to consider the apps a “heightened risk.”
The House of Representatives’ Chief Administrative Officer (CAO) echoed these concerns just this week following the keylogging report, issuing a “cyber advisory” about security on TikTok, noting that, despite its Culver City headquarters, it’s still “a Chinese-owned company.”
So even a U.S. government that was initially inclined to be more TikTok friendly may be having second thoughts.