Blockchain startup Symbiont files for bankruptcy

A software company that provides blockchain services to some of the biggest names in finance has filed for Chapter 11 bankruptcy protection, amid a period of retrenchment for distributed ledger technology initiatives in finance.

Symbiont.io is a rare blockchain vendor that seemed to have earned the confidence of big banks and assets managers, with clients including American Century, Citi, State Street and Vanguard.

A Symbiont spokesperson confirmed the bankruptcy: “Given current market conditions, we have decided to file Chapter 11 bankruptcy protection in an effort to pursue strategic business alternatives and maximise shareholder value.”

Vanguard, a key backer, had used its technology since 2017 to plug index data—such as which companies both in and out of the CRSP indexes—into its trading systems.

Last December, State Street and Vanguard completed the margin calculation of a live 30-day foreign exchange forward contract using Assembly, Symbiont’s distributed ledger platform. The technology allowed fair values to be calculated a number of times per day and a digital form of collateral transferred intraday across the blockchain.

Vanguard’s fintech strategy team, led by Warren Pennington, had been heavily involved in the Symbiont collaboration, and the fund manager had been planning to roll out the technology across its funds this year.

In a statement, a Vanguard spokesperson said: “Vanguard has partnered with Symbiont on a variety of projects that leverage innovative blockchain-enabled technology to improve outcomes for investors, including the distribution of data for certain Vanguard index funds.”

“Vanguard has robust contingency plans in place and fully expects all fund operations to continue seamlessly,” the spokesman added. “[It] will continue to explore cutting-edge technologies that drive innovation in market structure and reduce costs for investors.”

Symbiont was also working with a number of other firms, including American Century, a US investor with $200 billion of assets under management.

In September, Swift said it was trying out Symbiont’s Assembly to provide investors, dealers and custody banks with easier access to details of corporate events, such as dividend payments.

Some projects have proven rocky. Symbiont’s reliance on its own coding language made integration with client systems a challenge, says an executive involved in blockchain efforts at a bank.

The case is being handled in the United States Bankruptcy Court for the Southern District of New York.

A number of financial services blockchain initiatives have struggled to gain momentum and run into financial difficulties in recent months. In July, Zurich-based reinsurance industry consortium B3i went into liquidation.

Symbiont’s bankruptcy filing follows the collapse of Australian Securities Exchange’s effort to move its equity settlement system onto a blockchain run by the vendor Digital Asset.

Symbiont was founded by Mark Smith, a seasoned fintech entrepreneur with a background in the FX market, in 2013.

The Symbiont spokeperson added that the company is “engaged in various active discussions with interested parties on potential business alternatives and are operating business as usual”.

“Our goal is to resolve our financial situation within the coming weeks. In the meantime, we remain committed to our mission and are working with our clients on a series of timely initiatives and projects in the collateral management, data, and issuance space.”

Human resources service provider Trinet—Symbiont’s largest creditor—is owed $1.2 million, according to court documents. Other creditors include Amazon Web Services, which is owed more than $93,000, and cloud services provider Do It, which is owed $240,000.

Update, December 9, 2022: This story was amended to clarify that Vanguard uses Symbiont’s technology to transfer data for CRSP indexes, and that American Century Investments was working on a pilot with Symbiont. Franklin Templeton has previously worked on a pilot with Symbiont but is not a current client of the business.