Posted on

Peter Thiel Fund Moves to Ease Trades for Big Crypto Investors

Founders Fund, the Silicon Valley venture capital firm known for its early investment in Facebook, has reportedly put money into a cryptocurrency startup that aims to optimize the bulk trading of cryptocurrencies.

According to the Wall Street Journal on Tuesday, Founders Fund – co-founded by the high-profile investor Peter Thiel and based in San Francisco – is now backing a startup named Tagomi Systems Inc., which boasts a mission to serve as a broker-dealer to optimize bulk bitcoin trading orders for high-value clients.

While it remains unclear how much Founders Fund has invested in Tagomi, the report said the startup has netted $15.5 million in funding so far. In addition, a filing made with the U.S. Securities and Exchange Commission, dated March 15, indicates that Napoleon Ta, a partner at Founders Fund, will serve as a Tagomi director.

According to the WSJ report, the problem that the startup aims to solve stems from a fragmented trading environment across global cryptocurrency exchanges, where, for instance, the price of bitcoin can vary between platforms.

As such, the startup – co-founded by Greg Tusar, the former chief of electronic equities trading at Goldman Sachs – is building a platform that finds the best market to execute large numbers of cryptocurrency trading orders at a specific time.

The news comes soon after it was revealed that Founders Fund itself has already moved to invest in bitcoin, as reported by CoinDesk in January.

It also follows Thiel’s bullish view on bitcoin reported in October last year when the billionaire investor argued that critics of bitcoin were “underestimating” the cryptocurrency. And, in March, he said there will ultimately be only one digital equivalent to gold, and bitcoin, as the “biggest” cryptocurrency, will triumph.

Peter Thiel image via CoinDesk

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

Israeli Supreme Court Rules for Bitcoin Broker in Bank Dispute

A cryptocurrency brokerage based in Israel won’t have its bank account closed – for now , anyway- thanks to an intervention by the country’s Supreme Court.

Bits of Gold, which launched its services in 2013, was on the cusp of having its Bank Leumi account cut off on account of its business model, according to a report from The Marker. The issue dates back to last fall when banking officials there reportedly began scrutinizing the accounts held by cryptocurrency users and businesses more closely.

But the Feb. 26 ruling from the Supreme Court – a temporary injunction following an appeal by Bits of Gold – has put off the potential closure until a formal review of the issue can be conducted. In the order, the judge wrote that the concerns expressed by Bank Leumi are merely speculative and that Bits of Gold “acted transparently and did not violate any provision of law” during its years of operation.

The temporary injunction doesn’t necessarily mean that Bits of Gold will keep its banking access, however, and the ruling states that the bank still has the right to scrutinize specific activities related to the account. That said, the outcome and the nature of the ruling itself has given the startup cause for celebration amidst the uncertainty.

“The court’s decision enables us to focus on the growth of the Israeli cryptocurrency community. We were the first to request for the creation of rules for digital currency trade and the first to comply with those rules and others,” Youval Rouach, CEO at Bits of Gold, said in a statement. “We’ll continue to lead this field in order to give cryptocurrencies their rightful place – as a massive growth engine for the Israeli high tech and fintech industry.”

The developments come as the regulatory picture in Israel around cryptocurrencies gains more clarification as a result of recent government statements. On Feb. 19, the country’s tax office indicated that it would treat bitcoin as a form of property, making any profits realized subject to a capital gains tax.

Gavel image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Posted on

German Regulator Orders Crypto Exchange to Halt Brokerage Business

German Financial Supervisory Authority (BaFin) has ordered Crypto.exchange GmbH, a Berlin-based exchange, to immediately stop acting as a financial broker.

The order was issued after the exchange advertised on its website, btc-now.de, that it would sell customer’s bitcoins for euros and sell them on a stock exchange, says BaFin in a statement. The firm claimed the purchase price would be transferred to the investors within 30 minutes, it adds.

According to BaFin, the financial commission business operated by Crypto.exchange GmbH is not authorized by the regulator. The financial watchdog took the decision after users claimed that they did not receive any money for cryptocurrency that was transferred to the firm, Bloomberg states.

“The BaFin order is immediately enforceable by law, but not yet final,” said the release. At press time, the btc-now.de website was not operational.

Back in April, BaFin moved to shut down a payment processor tied to to the OneCoin cryptocurrency scheme, a digital currency service that has faced widespread allegations of fraud, and has been fined 2.6 million euros in Italy.

Weeks later, BaFin issued new cease-and-desist orders to two holding companies connected to OneCoin, ordering the companies to “dismantle their internet based OneCoins trading system.”

Editor’s Note: Some of the statements in this report have been translated from German. 

Euro image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Posted on

Where to Trade Bitcoin? Brokerage Apps Move In Amid Market Boom

Established brokers and startups want in on the crypto boom – but, Trading 212 is a bit of both.

Founded by Bulgarians Ivan Ashminov and Boris Nedialkov, Trading 212 is the trade name for Avus Capital, a broker-dealer with roots going back 14 years in foreign exchange and commodities dealing in Europe. But while the company isn’t exactly new, what it’s doing with share trading and cryptocurrencies is – and it seems to be generating success so far.

Its app is the most-downloaded trading app in the UK, with the company now providing a full-blown trading operation, with markets in some 2,500 instruments, ranging from shares to commodities.

In June this year, however, Trading 212 took a bold step in adding cryptocurrencies to the mix, helping it to attract a younger crowd – the millennials – broking industry incumbents are finding hard to reach. These are the consumers who grew up against the background of the 2008 financial crisis, and as a consequence, are inclined to see financial service companies as the bad guys.

And while U.S. fintech startups Invstr and Kapitall are targeting the same demographic of 20-something financial cynics, they don’t yet have the “magic sauce” of crypto to sell on their shelves. For the likes of Trading 212, crypto is a way of further enhancing its appeal to new users.

But the question is: just how effective has this push been?

No hard figures

Nick Saunders, chief executive of Trading 212’s UK operation, won’t say for sure.

In interview, Saunders was cagey about disclosing exact figures on how much crypto constitutes in terms of its overall business, although he described the contribution as “significant.”

“We’d rather not share the exact numbers but it is [a few percent] of the combined volume generated by all exchanges, which is quite a lot for a single retail broker,” he said.

Still, Saunders did suggest that Trading 212 is benefiting from the wave of new attention cryptocurrencies have received in 2017. After rising from under $10 billion at the start of the year, the total value of the combined market has risen to more than $170 billion.

In short, it’s showing all the attributes of a hot market that’s generating returns.

Saunders continued:

“Clients numbers are always driven by volatility and the news. When the two combine and bitcoin price rises make headline news, this drives new clients to open accounts.”

Options and options

It doesn’t hurt that Trading 212’s app, honed for more mainstream tastes, is slick.

The app includes a real-time chat facility in a link-up with TradeBird – a trading-focused social network set-up by Trading 212’s founders; accessible educational tools and regular cryptocurrencies analysis, which has all helped it to attract a growing audience.

Even before it offered crypto, Trading 212 caught imaginations when it came up with a freemium model for share trading, in which customers get commission-free dealing for up to 10 trades a month, up to a maximum value of £10,000 per trade.

The company estimates that 90% of its equity customers will pay nothing at all, with the 10% of high-rolling “whales” delivering its revenue stream.

Perhaps propelling its growth among more seasoned cryptocurrency traders, though, is that it has also added a swath of available options from the asset class. Customers can deal not just in bitcoin and ether, the two largest cryptos by market cap, but in ripple, bitcoin cash, dash, monero and neo.

Saunders revealed to CoinDesk that Trading 212 plans to add a further 14 currencies in November – ethereum classic, zcash, qtum, omisego, iota, eos, lisk, augur, cardano, waves, stratis, ark, steem and stratis.

Making markets

Apart from that, Saunders is pledging the app can “remove all the complexity and risk” of owning cryptocurrencies, which today often involves storing or managing a set of cryptographic keys (or trusting someone else to do so), by using contract for differences (CFDs).

A type of financial instrument made to mirror an underlying asset, the use of the tool means that trading crypto on the platform does not involve buying the claims to those keys, as you would on a crypto exchange such as Bitfinex, the marker leader by volume.

But, CFDs have a downside, too, in that trading isn’t yet available in the U.S.

CDFs involve trading on margin, which has the effect of magnifying gains but also losses and is why the SEC has taken it upon itself to protect traders by banning CFDs.

Still, Trading212 has made other tweaks to its service to accommodate cryptocurrencies.

For one, it has a Bitcoin Mini market that quotes a price one-tenth the value of bitcoin, which they believe makes opening a position much more manageable and possible less scary. (Saunders says the average deal size for bitcoin is around £10,000.)

As with fiat currency or share trading, stop loses can also be set so you get to sleep at night without worrying if the South Koreans are about to start selling bitcoin big time.

Trading 212’s killer feature, though, is perhaps the fact that on its crypto markets you can “sell” coins as well as buy. This provides novice and experienced users alike with a way to “short” the market if they think prices are going to fall. As ever with trading, it’s all about the timing.

Bigger wave

Elsewhere, other CFD, spread betting and forex brokers have been getting in on the action.

Avatrade.com and Trade.com are two forex brokers trying their hand at crypto. Another is InterTrader, which provides dealing in bitcoin and ether, and is currently giving away 1 ether to anyone opening a new account and trading a stake worth a minimum of €500.

And then there’s UK spread-betting behemoth IG Group, which was the first to offer CFD and spread-betting bitcoin products. Shai Heffetz, managing director at InterTrader is a long-time bitcoin believer, stating: “There is no doubt virtual currencies are going to play a significant role in the future of the economy.”

A new kid on the block is a trading app from startup Bux, positioning itself as a “millennial financial brand,” is trying to make headway by turning stock investing into a game with virtual trading, hoping to convert its young customer base to funding their accounts with real money.

Of its 200,000 UK users, Bux claims 85,000 are now using real money. Its app, with a design look-and-feel that evokes then Grand Theft Auto video game, and judging from the stream showing what app users are trading, bitcoin is one of the more popular trades among its client base.

Still, the likes of Coinbase notwithstanding, buying and securing your crypto is not seen as a straightforward matter by most ordinary folk.

Yet, as interest in crypto grows, the new breed of trading apps from Trading 212 (and others) show there’s a big market for more familiar ways to gain exposure.

Image via Trading212

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.