Crypto Exchange Bitstamp: Our New Matching Engine Will Be Up to 1,250 Times Faster

Siamak Masnavi

On 5 November 2018, cryptoasset exchange Bitstamp announced that it had partnered with Cinnober, a leading provider of trading and clearing technology, in order to replace its in-house developed matching engine with Cinnober’s "TRADExpress Trading System". The customized software "will be hosted and operated by Bitstamp."

As reported by CryptoGlobe, Bitstamp, which was founded in 2011 by Nejc Kodrič and Damijan Merlak, got acquired by European investment firm NXMH. In an article posted on its website, Bitstamp explained why it chose to partner with Cinnober:

"We chose Cinnober because of their proven track-record in worldwide financial marketplaces, their understanding of our vision and ability to work closely with us to customize the technology to meet our needs."

Stockholm-headquartered Cinnober was founded in 1998. Its customers include Australian Securities Exchange, Athens Stock Exchange, Dubai Gold & Commodities Exchange, Johannesburg Stock Exchange, and London Stock Exchange.

David Osojnik, Bitstamp's Chief Technology Officer, says:

“While Bitstamp’s matching engine was already very good by crypto standards, this will put us in the same league as traditional exchanges with decades of experience. Our platform’s order matching speed is expected to become 1250x faster, while throughput will increase by 400x.”

The implementation will be done in several stages, with the first stage taking place in Q1 of 2019; the new matching engine should be fully integrated into Bitstamp by the end of Q2 2019.

According to Cinnober's press release, Peter Lenardos, the CEO of the Cinnober Group, stated:

“We are excited to announce this partnership with Bitstamp, facilitating continued success for their marketplace. Bitstamp is one of the world’s leading bitcoin exchanges and has a position of trust in the digital currency trading community. By upgrading their trading technology to further improve performance and stability as interest from investors and regulators grow, they demonstrate their firm commitment to providing a safe and reliable marketplace.”

As for Bitstamp's CEO (Nejc Kodrič), he said:

"This is a crucial step on our mission to bridge the gap between crypto and traditional finance."

Eric Wall, Cinnober's Cryptocurrency & Blockchain Lead, tweeted:

 

Featured Image Courtesy of Bitstamp

Bitfinex and Tether Fraud Allegations: Analysis, Market Response, Community’s Reaction

On Thursday (April 25), New York Attorney General ("NYAG") Letitia James announced that she had obtained a court order against iFinex (the operator of crypto exchange Bitfinex) and Tether (the issuer of the stablecoin of the same name) to stop these two companies from any "further violations of New York law." This article summarizes the main highlights of the facts as presented by the NYAG, how the crypto markets have reacted, and early responses from some prominent members of the crypto community on Twitter. 

The “Facts” As Presented by Assistant Attorney General Whitehurst’s Affirmation

According to the affirmation filed (at the New York Supreme Court) on Thursday by Brian M. Whitehurst, who is an Assistant Attorney General ("AAG") in the office of NYAG James, here are the main "facts" of the case against Bitfinex and Tether, as beautifully summarized by highly-respected New York-based crypto trader/analyst Alex Krüger (@krugermacro on Twitter):

  • "Bitfinex has a $850M 'hole" since late 2018"
  • "The $850M are 'stuck' with Crypto Capital, a third party payments processor used by Bitfinex"
  • "Crypto Capital argues the $850M have been seized by govt authorities of various countries"
  • "Bitfinex mgmt believes Crypto Capital's principals may be engaged in fraud"
  • "USDT were seemingly fully backed by USD until Nov/2018"
  • "Between Nov/2018 and Mar/2019, Tether transferred $625M to Bitfinex => Tether ceased to be fully backed by USD"
  • "In Mar/2019 Bitfinex 'returned' the $625M to Bitfinex"
  • "Since Mar/2019 Bitfinex is covering the hole with a $900M line of credit from Tether"
  • "The line of credit (which pays 6.5% p.a.) is secured by iFinex shares"
  • "Bitfinex has accessed $700M from the line of credit"
  • "Per the NY AG, Bitfinex and Tether are engaged in fraud"

And here are some other interesting observations from Alex:

Bitfinex's Response 

A few hours after the NYAG's press release came out, Bitfinex issued its response in the form of an announcement posted to its website:

"Earlier today, the New York Attorney General’s office released an order it obtained – without notice or a hearing – in an attempt to compel Bitfinex and Tether to provide certain documents and seeking certain injunctive relief.

The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million “loss” at Crypto Capital. On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded. We are and have been actively working to exercise our rights and remedies and get those funds released. Sadly, the New York Attorney General’s office seems to be intent on undermining those efforts to the detriment of our customers.

Bitfinex and Tether have been fully cooperative with the New York Attorney General’s office, as both companies are with all regulators. The New York Attorney General’s office should focus its efforts on trying to aid and support our recovery efforts.

Both Bitfinex and Tether are financially strong – full stop. And both Bitfinex and Tether are committed to fighting this gross overreach by the New York Attorney General’s office against companies that are good corporate citizens and strong supporters of law enforcement. Bitfinex and Tether will vigorously challenge this, and any and all other actions, by the New York Attorney General’s office."

Crypto Markets' Response

Naturally, this news has hurt the price of pretty much all cryptoassets with the main exception being stablecoins that are Tether's main competition, such as USD Coin (USDC) and TrueUSD (TUSD), which have gone up between 1 and 2 percent against USD. 

BTC - 24 Hour CC Chart - 26 Apr 2019.png

ETH - 24 Hour CC Chart - 26 Apr 2019.png

USDT - 24 Hour CC Chart - 26 Apr 2019.png

USDC - 24 Hour CC Chart - 26 Apr 2019.png

What is most interesting about the crypto markets' reaction is that Tether's price has barely been affected this time, unlike in October, when the USDT price reached a low of $0.86. The fair value of Tether is $0.75 at a minimum since Tether seems to be backed 75% by "currency and cash equivalents" and 25% by a loan collateralized by iFinex shares, which used to be worth around $10, but worth around $2 a few hours ago:

This means that the collateral of 60,000,000 iFinex shares might only be worth around $120 million at the moment, whereas the line of credit is for $900 million.

This tweet sums up nicely what one can say about Tether's current fair value:

Crypto Community's Reaction

Here are some of the more interesting early reactions from the crypto community on Twitter:

 

Featured Image Credit: Photo via Pixabay.com