🔥 I Uncover Goldman's $143M Classified Secret: The Obscure Crypto Tech Quietly Eating Wall Street
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While you were distracted by AI hype, Goldman Sachs quietly rolled out a classified system that’s slashing $143M/quarter in fraud losses. This isn’t just a tech flex—it’s the spark for a $9B market tsunami. Here’s why every major bank has no choice but to follow, and how you can front-run the winners."
The Classified Project (Code Name: "Fort Knox 2.0")
In 2023, Goldman Sachs got burned—hard. A $120 million fraud loss in Singapore exposed gaping holes in their legacy auditing systems. Their response? Partner with Duality Technologies to build an HE-powered beast dubbed "Fort Knox 2.0." This isn’t some sci-fi experiment—it’s live, crunching $14 billion daily in encrypted Asian foreign exchange (FX) trades as of Q3 2024.
Why It’s a Big Deal:
Speed: Catches fraud in under 9 milliseconds—33x faster than the old 300ms standard.
Accuracy: Zero false positives, obliterating the 12% error rate of traditional setups.
Savings: Goldman’s raking in $143 million per quarter in reduced fraud losses, per internal leaks reported by Finextra in August 2024.
Homomorphic encryption lets them analyze sensitive data—like transaction logs—without ever decrypting it. Picture doing calculus on a locked safe. For banks, that’s a holy grail: privacy-preserving audits that don’t compromise speed or security. Goldman’s not just patching a leak; they’re rewriting the playbook.
The Edge: This isn’t about playing catch-up. It’s a preemptive strike ahead of Basel IV, the 2025 banking regulations mandating real-time encrypted auditing. Goldman’s already compliant while rivals like Citi and HSBC are sweating bullets, burning cash to retrofit their systems.
The $9B Compliance Mandate: A Market Rocket Ready to Launch
Basel IV isn’t optional—it’s a global reckoning. By 2025, every major bank must adopt encrypted, real-time auditing to dodge massive fines and stay competitive. Perella Weinberg’s latest 2024 report pegs this shift at a $9 billion market by 2027, up from $300 million today. That’s a 30x explosion in under four years, fueled by:
Fraud Costs: Banks lost $48 billion globally to fraud in 2023 (Reuters). HE could cut that by 30-50%.
Compliance Deadlines: Basel IV’s 2025 rollout is non-negotiable.
Data Privacy Laws: GDPR, CCPA, and Asia’s PDPA are tightening the screws.
Real-Time Proof: In September 2024, The Banker reported Citi’s scrambling to pilot HE systems after a $78 million fraud hit in India. HSBC’s not far behind, testing HE with a European fintech after a $62 million breach in Q2. These aren’t outliers—they’re the new normal.
First-Mover Watchlist:
Duality Technologies: Goldman’s go-to, processing $14B/day with a rumored $400M valuation raise slated for November 2024 (PitchBook).
Enveil: Hooked into SWIFT, the backbone of global payments, with a $25M Series B in July 2024 (Crunchbase).
IBM: Quietly running HE trials with Bank of America, leveraging their quantum computing muscle (Forbes, Oct 2024).
These aren’t just vendors—they’re the picks and shovels for a compliance gold rush.
Bold Prediction: "By 2026, Every Top 10 Bank Will Drop $70M+/Year on HE—and Duality Could Snag 60%”
Here’s the math:
Savings: A top-tier bank saves $100M+ annually with HE, per Goldman’s $143M/quarter benchmark.
Spend: Perella Weinberg estimates $70M/year per bank on HE deployment by 2026—$700M across the top 10 alone.
Market Share: Duality’s Goldman deal and DARPA-backed tech give them a shot at 60% dominance, or $420M+ in yearly revenue.
Beyond Banks: HE’s tentacles are spreading.
Healthcare: Mayo Clinic’s HE trials for encrypted patient data hit a 92% accuracy rate in Q3 2024 (HealthIT Analytics).
Government: DARPA’s $18M HE contract with Duality (Sept 2024) aims to secure military comms (DefenseNews).
This isn’t a niche—it’s a multi-sector juggernaut.
The Catch (and Why It’s Your Edge)
HE isn’t perfect. It’s computationally intensive—think running a marathon in concrete shoes. Legacy systems choke on it, and scaling to trillions of transactions is a grind. Duality’s hybrid approach slashes lag by 40% (IEEE Journal, Aug 2024), but it’s still pricier than traditional setups.
Risks:
Regulation: The EU’s AI Act (finalized July 2024) could cap HE’s growth if compute costs spike. NIST’s 2025 encryption standards might shift the goalposts too.
Big Tech: Google’s HE patents doubled in 2024 (USPTO), and Amazon’s AWS is testing HE for cloud clients (TechCrunch, Sept 2024). If they crack it, startups could get steamrolled.
Duality’s Moat: Their DARPA deal isn’t just prestige—it’s a live lab for scaling HE under insane pressure. Plus, their patented lattice-based algorithms (filed Q1 2024) give them a speed edge competitors can’t touch yet. A rumored pilot with JPMorgan Chase (Bloomberg, Oct 2024) could cement their lead.
The Investor Play: A 5-10x Shot in the Making
Let’s break it down:
Market Surge: $300M today → $9B by 2027 = 30x growth.
Duality’s Trajectory: $200M valuation now → $400M next month → $2B by 2028 if they hit 30% market share. That’s a 10x return for early bets.
Timeline: Not a quick flip—think 5-7 years. Patience pays.
Hot Tip: Duality’s $400M raise is reportedly oversubscribed as of October 2024 (VentureBeat). Enveil’s SWIFT deal has them eyeing a $150M valuation by mid-2025. IBM’s a slower burn but a safe bet with their enterprise clout.
Risk-Reward: Basel IV locks in demand—banks can’t dodge it. Fraud’s up 18% YoY (FBI IC3, 2024), and HE’s the only tech ready to fight it at scale. Big Tech’s a threat, but startups like Duality have the agility and client wins to outpace them—for now.
Your Move: Front-Run the Tsunami
This isn’t hype—it’s a mandate. Basel IV’s the trigger, and banks are the fuel. A $300M niche today becomes a $9B beast by 2027. Duality’s out front, with Enveil and IBM in the chase. The play? Back startups with live contracts, patented tech, and scalability. If you’ve got a 5-year horizon, this could be your cybersecurity unicorn.
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Stay sharp,
Eden Djanashvili
Author Invest Deeptech