A Montreal entrepreneur wants to exploit the problems facing foreign cryptocurrency platforms to convince investors to choose a solution in Quebec.
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The American financial market police officer Securities and Exchange Commission (SEC) this week filed a lawsuit against the global number one in the industry, Binance, accusing it in particular of not having adequately kept customer deposits.
The SEC has also filed a lawsuit against the US’s largest crypto exchange, Coinbase, for failing To with the authorities.
Jean Amiouny, co-founder and CEO of the Quebec platform Shakepay, observes Washington’s show of force with satisfaction.
“We’re a pretty conservative platform and what’s happening in the United States really confirms that we have the right approach,” the 32-year-old said in an interview with Le Journal.
“We’ve been segregating our users’ funds from the company’s funds since our early days,” he says.
Tough year for the industry
Crypto enthusiasts haven’t had it easy since last year, with several exchanges going bankrupt, including Celsius Network, which saw the Caisse de Depot lose $200 million, and the eccentric Sam Bankman-Fried’s FTX, who was accused of fraud.
“When the Autorité des marchés financiers (AMF) and other bodies started talking about regulating the crypto space in 2020, we emailed them to start the discussion with them. We were really proactive. We always thought we had to do things right so that Shakepay would still be around 10, 15 and 50 years from now!” explains Mr. Amiouny.
Photo provided by Shakepay
John Amiouny
Since the end of May, Shakepay has been one of ten crypto platforms officially registered with the AMF.
To achieve this, Shakepay has specifically committed to:
- warns its users about the risks associated with cryptos;
- set limits on the financial losses that each client can suffer in the event of a decline in the value of cryptos;
- informing its clients that they are not covered by the Canadian Investor Protection Fund;
- monitor accounts for non-compliant activity;
- hold sufficient cash;
- provide the AMF with detailed information about their customers’ accounts on a monthly basis.
Coinbase customer
Note that the SEC warning shot could have implications for Shakepay, as the Quebec company stores its customers’ cryptos with a Coinbase subsidiary. The latter, Coinbase Custody, is licensed by the New York State regulator, but the SEC is considering tightening rules in this area.
The agreement reached with the AMF also stipulates that Shakepay must disclose to its users at what price they are buying cryptos and at what price they are selling them. However, there is no obligation to indicate the price difference as a percentage. With this difference, which varies between 1 and 2% of the transaction value, the company makes its money (like traditional brokers).
In a class action lawsuit filed against Ontario-based Shakepay and Wealthsimple last fall, LPC Avocat estimated Shakepay generated at least $84 million in revenue this way. The calculation was based on the volume of transactions made through Shakepay since 2018, i.e. $7 billion. That number now exceeds $9 billion.
Jean Amiouny declined to comment on the class action lawsuit, but doesn’t seem concerned. Just over a year ago, Shakepay raised $44 million in a funding round, valuing the company at $313 million.
“The growth of the company has been amazing. At times we didn’t sleep anymore!” said Mr. Amiouny.
Shakepay soon
- Foundation: 2018
- Founders: Jean Amiouny and Roy Breidi
- 1.2 million customers in the country, 25% of which are from Quebec
- Since 2018, more than $9 billion worth of transactions have been completed
- About 70% of the customers are between 25 and 44 years old