Blue, which offers know-your-customer (KYC) and anti-money-laundering (AML) identity verification products for traders on decentralized-finance (DeFi) protocols, has come out of stealth with $3.2 million in funding.

The funds were raised in a seed round co-led by Blockchange Ventures and Fenbushi Capital, with participation from DoraHacks, Knollwood Investment Advisory, Gate.io and Wave Financial, according to a company blog post Tuesday.

The announcement comes as interest in DeFi, a term used to refer to lending, trading and other financial activities carried out on a blockchain without traditional middlemen, has reached new heights in the wake of centralized cryptocurrency exchange FTX’s collapse late last year and a series of crypto exchange bankruptcies earlier in 2022.

Blue will use the funding to complete security audits from Halborn and Verilog Solutions. The rest of the money will go into expanding Blue’s core team and bringing the company’s permissioned DeFi product to market in the first quarter.

The company has already begun working on several proof-of-concept projects with major DeFi protocols, which it will announce in the coming months, Blue co-founder and CEO Casper Yonel said.

“We have basically a really wide array of customers that are interested in the product. We have institutions, banks, on-off ramps, liquid staking solutions, Reg S issuers,” Yonel told CoinDesk. “There’s a lot of different use cases across different types of customers.”

Reg S refers to a Regulation S offering that allows a company to issue equity or debt and to use an online method to raise capital from U.S. investors

Blue has built out its permissioned DeFi offering, which assigns “Blue IDs” to users who are then verified by a team of credential issuers.

The company was the finalist at the ETHDenver ‘22 Hackathon last March. Since then, the firm has also participated in other programs such as Outlier Venture’s DeFi Base Camp Accelerator, crypto exchange Binance’s Most Valuable Builder program and Startup with Chainlink’s incubator.

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