Regulated, Trusted & Safe – Our Approach to Securing Canadians Crypto Investments
This year has been tough for investors with record inflation numbers, interest rate spikes, supply-chains affected by lockdowns, war in Ukraine, the TERRA stablecoin collapse and crypto lending platforms filing for bankruptcy.
No matter how you slice it, many investors are left wondering whether they should remain invested in crypto and what kind of risks they are exposed to.
That’s why we wanted to take a moment to update you on where we stand given the market conditions. Hopefully, we’ll remind you that you are in good company when trading crypto with Netcoins.
Your Questions, Answered.
First, some context.
What is happening between Binance and FTX?
On Tuesday, November 8, 2022, Binance, the world’s largest crypto exchange by volume, made an announcement that shocked the business world and the crypto community. Binance revealed that it had signed a letter of intent to acquire FTX. This news had a ripple effect across the Crypto space, with significant implications for coin values.
Earlier in the week, the owners of the two exchanges- Samuel Bankman-Fried of FTX and Changpeng Zhao of Binance- exchanged “words” on Twitter. Changpeng told his followers that his exchange would slowly start to withdraw billions of its holdings in FTX’s native token due to certain revelations that came to light surrounding FTX’s liquidity via a CoinDesk report.
Since then, Binance has made a deal to buy the rival crypto exchange, rescuing the company from its liquidity crisis. This deal marks a tragic collapse for FTX, a company that earlier this week was listed as the third largest crypto trading platform by volume.
In the aftermath of the acquisition announcement, FTX has said they are working on clearing the withdrawal backlog, and now with the help from Binance, all assets will be covered 1:1. This may take some time. Still, the CEO of FTX stated that it was a user-centric development that he believes will benefit the entire industry.
What happened with Three Arrows Capital (3AC), Celcius, Voyager and Blockfi?
Lending companies Celsius, Voyager and Blockfi took customer deposits, promised them high yields and lent the funds to borrowers like Three Arrows Capital; a cryptocurrency hedge fund that managed around $10 billion USD in assets (most of which was borrowed). *
But a combination of unsustainable business models, over-leverage (when a business takes on too much debt and is unable to pay it back), amid a crypto bear market and exposure to the Terra stablecoin collapse meant that 3AC couldn’t pay back its debt to the lending companies. In turn, the lending companies couldn’t pay their customers so they prevented customers from withdrawing their deposited funds due to a lack of liquidity. This domino effect rippled through the industry and exposed a number of interconnected businesses that relied on a number of critical factors, and each other for stability.
What followed was the crypto crash we’re seeing today with many of these lending companies now filing for bankruptcy.
Is Netcoins Affected by the Demise of 3AC, Celsius, Voyager and Blockfi?
No, our customers’ funds were not loaned out to, or have exposure to 3AC, Celsius, Voyager, Blockfi or any other similar counterparty. Netcoins does not provide any lending, and by not being affiliated with them, we were not exposed to any losses or risks that these companies experienced.
How are Netcoins Customer Funds Held & Protected?
All customer fiat deposits (ex: your Canadian Dollars) are held in a designated trust account with a regulated Canadian financial institution. They’re also held separately from Netcoins’ business funds. This means Netcoins cannot use customer funds for business, operating expenses or other corporate-related expenses.
When it comes to crypto, a vast majority of our customers’ crypto assets are held in cold storage by a qualified third-party Custodian and are backed by a $250 million USD insurance policy. Any client crypto assets held in hot wallets are protected by CoinCover and are 100% insured against loss or theft.
(Cold wallets are crypto wallets that are not connected to the internet while hot wallets are connected to the internet.)
How Has Netcoins Been Doing During this Market Downturn?
Netcoins continues to operate as normal. Our focus has been (and continues to be) to strengthen our trading platform, add new coins, make ongoing improvements, implement new trading features, and provide the best customer support experience in the crypto industry. We’re focused on paving the way for a safe and regulated crypto trading experience in Canada.
Why Should I Trade with Netcoins?
Beyond the bells and whistles of our trading platform, we’ve taken a view from early on that we will do right by our customers. This is why Netcoins is proud to be Canada’s first publicly owned crypto trading platform to be fully regulated.
As part of our license and being fully regulated, we must adhere to strict guidelines set by the Provincial Securities Regulators which make up the Canadian Securities Administrators (CSA). This includes the British Columbia Securities Commission (BCSC), Ontario Securities Commission (OSC) and more. Rigorous risk assessments and reporting are performed regularly and presented to regulators for approval before we ever take action on things such as adding new coins. In addition, we are not allowed to put customer assets at risk through lending practices.
We’re also owned by a publicly-traded company which means we have additional financial, operational and disclosure requirements. Our financials and business operations are available for public consumption anytime and you can view them by going here.
Netcoins is a subsidiary of BIGG Digital Assets (BIGG) which owns, operates and invests in crypto businesses that support and enhance a compliant and regulated ecosystem, like Netcoins. BIGG trades under CSE: BIGG | OTCQX: BBKCF | WKN: A2PS9W.
Regulated, safe, simple, and fast – that’s the Netcoins promise.
A Few Things to Remember.
Before we wrap up, we’d like to remind you a few things we’ve learned by being in the crypto space for a few years now.
When the crypto market is in a downturn, it can be a great time to reassess your investing strategy. Your investing decisions should really come down to three things: your personal timeline, your financial goals, and your risk tolerance. There are no right or wrong ways to invest because they vary by person.
Even if you have a perfectly laid out plan, expect to experience short-term losses. Markets go through cycles and history shows us that investments can recover – and perform well – over the long-term. That’s why investors with a long time horizon are typically rewarded for their patience and continued investing practices during bear markets.
Should you continue to invest, consider diversifying and practicing dollar-cost averaging (DCA). Diversification protects you from any single sector or downfall. Dollar-cost averaging, or the process of regularly buying small amounts of crypto over a period of time, helps to average out the price at which you buy. Diversification and DCA are both practices that can help protect your portfolio in the future.
Finally, Thank You for Choosing Netcoins.
At Netcoins, we’ve been working hard to build a crypto trading platform that is based on security, trust and safety. There has been an incredible level of rigor, hard-work, doggedness and care that each team member at Netcoins has displayed on a daily-basis. That’s why customer reviews like the ones below mean everything to us.
“I recently set up a new account with Netcoins and found the site really easy to use. The set-up was a snap and the staff checked in with me to see if everything was ok asking for any feedback for improvement. Their team is really responsive and friendly.” — Sean
On behalf of each of us at Netcoins, thank you for choosing us as your trusted partner in your crypto journey. It is a task we do not take lightly and one we do with great pride. We hope you feel confident in trading with Netcoins; Canada’s first publicly-traded, fully regulated crypto trading platform.
This blog post is general information only and should not be considered financial advice. Before buying cryptocurrency, or any other investment, be sure to conduct your own independent research.
- Crypto lender Voyager Digital suspends withdrawals, deposits
- Inside Celsius: how one of crypto’s biggest lenders ground to a halt
- BlockFi Had $600 Million in Crypto Loans Not Covered by Collateral in Q2
- Bankrupt Three Arrows Capital Owes $3.5B to Creditors, Including $2.3B to Genesis
If you’re looking to purchase Bitcoin or other cryptocurrencies, buy Bitcoin with Netcoins. Netcoins is a fully regulated crypto trading platform in Canada.
Written by: Fraser Matthews
President at Netcoins