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Potential Risks to Matrixport, a Competitive Crypto Startup Launched by Bitmain Co-founder

Former Bitmain CEO and bitcoin billionaire Jihan Wu has officially been tied to the launch of Matrixport, a new crypto startup that will offer over-the-counter (OTC) trading in Asia.

There is no doubt that Matrixport will compete with global exchanges to offer professional and institutional investor services. But the potential risks to the project can not be ignored.

The startup itself is incorporated in jurisdictions outside of mainland China to skirt Beijing’s ban on crypto-trading. As we all know, Chinese have strict regulations for cryptocurrency, especially for digital finance. Cryptocurrency transactions are banned in China and crypto exchanges are closed while Matrixport provides services to Chinese users openly and wantonly. Although the project is registered in Singapore, it will also bring greater regulatory and legal risks to the project.

When Matrixport carries out digital asset-related business, it requires more stringent authentication, and users will be divided into three levels of authentication. It was mentioned in the announcement that KYC1 is an identity authentication system, which can requires nationality and basic information; KYC2 is a non-Chinese user authentication system; and KYC3 is a Chinese user’s video authentication system. The transaction and lending authority varies in different authentication levels. The higher the authentication level is, the higher the amount of loan and cash withdrawal the users receive.

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In response to regulatory compliance issues, it is reported that the project has entered the Swiss Financial Regulatory Authority FINMA regulatory SRO membership list, belongs to Swiss compliance enterprises as its official website shows. Switzerland is currently recognized as a crypto-friendly country. Blockchain technology has penetrated into many fields in Switzerland. Switzerland is also one of the few countries that allows ICO in terms of cryptocurrency.

Matrixport is being designed as a an all-in-one exchange for OTC trading, lending and custody of crypto-assets, according to Chief Executive Officer Ge Yuesheng. The exchange made its official launch on July 8, with an unnamed source claiming it could become Asia’s “biggest over-the-counter desk and asset manager overnight.”

Ge Yuesheng said Matrixport would make use of the expertise from Bitmain to cater to the demand of Chinese crypto miners. Bitmain still ranks first among the Matrixport’s strategic partners, which include BTC.com, ANTPOOL and BITDEER.

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