crypto strategy

Indian crypto startups ensure no FTX-like mess

(This story originally appeared in November 21, 2022)

Indian crypto startups involved in crypto asset management, bitcoin stacking, and wallet management solutions said they have systems and protocols in place to ensure no FTX-like situations occur. arises with their users.

As the FTX contagion continues to reverberate through the crypto ecosystem, investors are concerned about the transparency, reserve levels, security, and internal controls followed by crypto companies.

Leading crypto investment platform Mudrex said it always keeps investors informed of all activity regarding their funds; it does not take any leverage or operate any credit on investors’ funds; its assets are securely stored and backed by 1:1 assets; and it uses separate hot/hot/cold wallets for storage and transactions.

“We have been in the cryptocurrency space for five years now and have survived many ups and downs. We have always maintained that user funds are of paramount importance and should never be risk,” said Edul Patel, Founder and CEO of Mudrex. FTX was trading with client funds and the demise of the exchange affected more than a million users. Since then, controlling client assets has become a major problem in the field of cryptography, because the exchanges control the private keys of the users.

During a purchase, the coins and tokens are stored in the customer’s wallet, which is hosted on the exchange.

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Khaleelulla Baig of Koinbasket, a thematic crypto investment platform, said his company didn’t take the risk and headache of taking custody of users’ assets, and users could keep their assets in their choice of wallets/exchanges.

Mohammed Roshan, co-founder and CEO of GoSats, a bitcoin stacking company, said he believes in the ethics of the bitcoin industry — not your keys, not your coins.

“We use multi-signature storage for user funds with industry-leading BitGo to process withdrawals. We advise users to maintain control of their bitcoin using a hardware wallet or multi-signature wallet and trusting no single entity to store their digital assets,” he said.

Manan Vora, Senior Vice President of Strategy and Operations at Liminal, a self-service portfolio management solution, said, “We have partnered with leading blockchains such as Polygon, Tezos, Avalanche , etc., where we support them and projects built on these blockchains with crypto custodial solutions to ensure the utmost safety and security.We are also seeing an influx of requests for our self-custody solutions.

Startups are also opting for crypto self-custody services, reassessing liquidity provisions, buying asset insurance, etc., he said.

Even startups that are about to launch their products are stepping up their efforts to protect consumers.

Take Muffinpay, a crypto-fintech platform soon to launch its product and operate to EU standards under the Crypto-Asset Markets Regulation (MICA). “As a utility token, $MFIN (MuffinCoin), it will not be accessible by management itself for a certain period of time. This means that initial investors will have the right to exit first with a better valuation of the token after the Additionally, we will be increasing transparency in the coming days to serve the best interests of our customers,” said Dileep Seinberg, Founder and CEO of MuffinPay.

Startups also purchase insurance to protect their clients’ funds. Liminal purchased $50 million insurance from Lloyds of London to provide 360-degree protection of client funds while Mudrex partnered with Binance Institutional for $100 million dedicated insurance.

Following the collapse of FTX, there was a deluge of bad news for investors as more and more crypto firms became collateral damage to FTX’s bankruptcy. Crypto lender BlockFi is preparing to file for bankruptcy protection, while another lender, Voyager, has reopened the bidding process for a new buyer. Crypto platform Genesis has suspended client redemptions on its high-yielding crypto loan product Gemini Earn. And people are growing increasingly concerned about Grayscale, a company that manages crypto assets, after the Bitcoin fund refused to release its proof of reserves.

Experts say that while startups and crypto exchanges have taken various measures to protect consumers and provide a safer environment, investors also need to be proactive in managing their assets.

“Regardless of the asset class, be it stocks, commodities, currencies or cryptos, investors should avoid complex trading activities such as arbitrage trading, forward contracts futures and options, margin trading and short selling Retail investors should get into the habit of withdrawing uninvested cash from “Investors should avoid blindly following non-crypto native influencers and anyone who makes the promotion of products without proper disclosure,” said Baig of Koinbasket. “It is very important to keep an eye on the latest developments in the crypto industry.”

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