FalconX's multi-million-dollar cumulative pre-seed and seed funding from an impressive list of investors reflects institutional demand for a platform that aims to fight artificially inflated trading volumes in the crypto space.

The cryptocurrency trading platform announced Wednesday it had raised a total of $17 million in a round led by Accel – which has Facebook and Slack in its portfolio – and with the likes of Coinbase Ventures, Fenbushi Capital and Avon Ventures also investing.

That's a lot for a pre-seed and seed round. To give some perspective, Facebook – the social media giant now worth over $600 billion – raised $12.7 million, in a round also led by Accel, in a Series A funding round in 2005. Of course, inflation means Facebook's raise would now be worth the same as FalconX's; then again, a pre-seed and seed come before a Series A.

So what made FalconX such a draw for investors? Put simply, it provides best trade execution. An AI platform plugs into a network of exchanges and dark pools, providing the best available prices and minimal slippage. The idea, explains the firm's website, is to provide the base trading layer that mainstream financial institutions need to delve into the digital asset class.

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In an email, a FalconX spokesperson told CoinDesk the platform provides a solution to wash trading, where exchanges or crypto projects trade against themselves to inflate volumes, drive up prices and dump assets on unsuspecting investors.

It's a known problem in crypto: a report from Bitwise in early 2019 claimed as much as 95% of all exchange volume was fake.

Wash trading is "a pain-point with our institutional clientele," a FalconX spokesperson said, and systemic data misreporting precludes mainstream institutions from touching the space. Filtering out "bad market data" had allowed the platform to scale to $7 billion in volume "while still in stealth mode and no spend on marketing," the spokesperson said.

So when it came to the seed round, a pitch of fighting against bad market data "resonated very well with our investors," the spokesperson explained. "They went into great detail on how we leverage data science to identify ‘wash volume’ in eliminating slippage, derive time guarantee from dynamic exchange order books, defend against security threats, and improve infrastructure reliability."

FalconX claims to have around 100 clients: hedge funds, proprietary firms and over-the-counter (OTC) desks as well as some mining firms and crypto exchanges. A further appeal to investors. The spokesperson couldn't help but mention their team, which included ex-employees from Google, Goldman Sachs, Pantera Capital, Kraken, and PayPal, which may also have helped.

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So what will FalconX spend its $17 million on? Per a press release, funding will go to new products and an expanded trade execution suite, as well as changes to the trading infrastructure aimed to help the company scale. Having only launched 10 months ago, FalconX claims to have a quarterly growth rate of 6,000%.

In TechCrunch's appraisal of the raise, company founders Raghu Yarlagadda and Prabhakar Reddy said potential clients are required to have around $10 million in assets under management (AUM). That requirement isn't likely to change as FalconX says it has no plans to broaden its client base; retail investors won't be able to use the platform.

CoinDesk asked whether FalconX is creating two-tiered market access and perpetuating an unfair trading environment.

A spokesperson said some of the firms clients use FalconX's technology to improve the trading experience for their own retail clients. But they added: "the market remains drastically underserved," perhaps hinting that there's nothing to stop other platforms providing best trade executions for retail investors, should they want to,