Show HN: First US-based Bitcoin broker(sf-ox.com)
sf-ox.com
Show HN: First US-based Bitcoin broker
http://www.sf-ox.com
10 comments
We do not front run any order.
We will make this clear on our site. We tried to do so by showing the complete order book and not just a single price.
You also have complete control of when you execute the algos.
Fixing the privacy policy - not sure what happened to the pdf upload. Thanks for catching.
We will make this clear on our site. We tried to do so by showing the complete order book and not just a single price.
You also have complete control of when you execute the algos.
Fixing the privacy policy - not sure what happened to the pdf upload. Thanks for catching.
You're absolutely right when you say that the brokerage could make money by front-running you. But so do the exchanges the broker is operating on. After all, we don't even know who operates btc-e, Bitstamp is slightly more transparent, Coinbase a bit more. The whole industry is completely unregulated so everyone could cheat you until it matures and some rules are set.
Technically (more like legally), a broker cannot front run an order.
Wouldn't front running as a broker be illegal anyway, or is bitcoin somehow different? IIRC the SEC has already showed that it won't ignore financial crimes just because they're done with bitcoin.
It's not their own explicit policies that prohibit traditional brokers from front running or through trading, it's regulation.
It's not their own explicit policies that prohibit traditional brokers from front running or through trading, it's regulation.
I don't think this is the "first" unless there is something I'm missing here that makes this different than the 4+ exchanges that already exist in the US.
Coinsetter, CampBX, Coinbase, Coinmkt, Kraken, SecondMarket / Bitcoin Trust
fyi discussion on reddit...
http://www.reddit.com/r/BitcoinMarkets/comments/2c1oo5/first...
Coinsetter, CampBX, Coinbase, Coinmkt, Kraken, SecondMarket / Bitcoin Trust
fyi discussion on reddit...
http://www.reddit.com/r/BitcoinMarkets/comments/2c1oo5/first...
Good question. All very different.
You can't see order book on coinbase and quickly trade in and out.
None of the other sites allow you to buy / sell with ACH.
Second Market is open to members only; not everyone. You have to be a member that is well funded to trade with them.
CampBX and Coinmkt are exchanges. We are not. Think NYSE and E-Trade. We are the E-Trade.
You can't see order book on coinbase and quickly trade in and out.
None of the other sites allow you to buy / sell with ACH.
Second Market is open to members only; not everyone. You have to be a member that is well funded to trade with them.
CampBX and Coinmkt are exchanges. We are not. Think NYSE and E-Trade. We are the E-Trade.
Aren't Coinbase trades ACH?
On a related note, I hear horror stories on /r/bitcoin all the time about bank accounts being shut down over supposed BTC activity. Does your service have a solution or guidance for this?
On a related note, I hear horror stories on /r/bitcoin all the time about bank accounts being shut down over supposed BTC activity. Does your service have a solution or guidance for this?
Our main feature is our execution; we are good at optimizing trade execution so you get the best price possible.
There are many banks in the US with very different rules so it is difficult to give a general answer. Have you heard of these stories from customers when buying and selling from coinbase?
There are many banks in the US with very different rules so it is difficult to give a general answer. Have you heard of these stories from customers when buying and selling from coinbase?
This isn't just related to user accounts; business accounts are frequently shut down (and not approved) because of Bitcoin activity. Coinapult closed operations in the US entirely because of this.
Our banks have reviewed our model. Banks can always change their mind which is why we work with multiple banks.
The inaccuracies in your claims about your competitors do not bode well for honesty or professionalism, and moreover indicate a poor understanding of your market and your competitors.
In another industry, this probably wouldn't be a red flag; it would just be standard marketing practice or startup posturing. But when you're dealing with money services, you don't get to be dishonest, unprofessional, or unprepared.
You've tripped quite a few red flags with your comments on HN today. I definitely won't be doing business with your website.
In another industry, this probably wouldn't be a red flag; it would just be standard marketing practice or startup posturing. But when you're dealing with money services, you don't get to be dishonest, unprofessional, or unprepared.
You've tripped quite a few red flags with your comments on HN today. I definitely won't be doing business with your website.
I'm curious about what inaccuracies are you referring to? Coinbase is not a trading platform (no serious trader would pay 1% fees), Kraken does not accept ACH deposits and so on. Can you be more specific? BTW, I love both Coinbase and Kraken (they serve very different needs and do it well).
Well Coinbase is essentially a broker and they support ACH transactions. Brokers don't typically show their order books and it doesn't look like you guys do either.
CoinSetter is kind of a hybrid broker / exchange and they offer fee rebates on coins purchased via ACH through coinbase.
I guess my point is why would I want to trade with you, a new and unproven company, that out of the gate is making a dubious claim of being the "first" of something of which there are already many. This is Bitcoin if you are making dubious claims on the small stuff how can we make the leap of faith that this isn't just scam company n+1
CoinSetter is kind of a hybrid broker / exchange and they offer fee rebates on coins purchased via ACH through coinbase.
I guess my point is why would I want to trade with you, a new and unproven company, that out of the gate is making a dubious claim of being the "first" of something of which there are already many. This is Bitcoin if you are making dubious claims on the small stuff how can we make the leap of faith that this isn't just scam company n+1
Hi, I'm the co-founder of SFOX. You can see the orderbook on our website. you need to be logged in to see it, but it is there.
We are more like E-Trade in that your order will execute on an exchange and the price is whatever is available at the moment. We don't frontrun your order. We plan to make money on trading fees.
We are more like E-Trade in that your order will execute on an exchange and the price is whatever is available at the moment. We don't frontrun your order. We plan to make money on trading fees.
I don't think Coinbase considers themselves a broker.
This is directly from coinbase's terms of service :
"3.1. Transactions with Coinbase. When buying or selling bitcoin through the Exchange Service, you are buying from, or selling to, Coinbase directly. Coinbase does not act as an intermediary or marketplace between other buyers and sellers of bitcoin. The Exchange Service is subject to the Coinbase "Conversion Rate." "Conversion Rate" means the liquidity adjusted price of a given bitcoin amount in terms of local currency as quoted on the Coinbase Site."
This is directly from coinbase's terms of service :
"3.1. Transactions with Coinbase. When buying or selling bitcoin through the Exchange Service, you are buying from, or selling to, Coinbase directly. Coinbase does not act as an intermediary or marketplace between other buyers and sellers of bitcoin. The Exchange Service is subject to the Coinbase "Conversion Rate." "Conversion Rate" means the liquidity adjusted price of a given bitcoin amount in terms of local currency as quoted on the Coinbase Site."
I just want to add to the answer that we like other services and use more than one in the list. We just don't see any of them meeting our needs to quickly trade and provide mechanism for large order sizes. Plus, wiring money becomes expensive very fast.
Why do these startups think that they can put up a website that has so little information about what they exactly do? There's nothing solid there about how they operate, what they charge, what promises or guarantees they make, etc etc.
Instead, they still find time to put a big 'meet the team' section in there, as if end users deeply care about the bios of the founders and don't care about how the product actually works or costs.
Instead, they still find time to put a big 'meet the team' section in there, as if end users deeply care about the bios of the founders and don't care about how the product actually works or costs.
How does your accumulate and distribute algo's work? Is it a VWAP, TWAP order? Basically slice-and-dice a hidden iceberg when there's volume on one side of the book that you're trying to trade for?
Also curious how you guys market make on BTC, are the prices you are showing as the other exchanges the asking price, and you guys are essentially tightening the spread? Or are you guys selling parts of bulk orders of the large sell orders directly? How do you hedge your inventory risk?
Also curious how you guys market make on BTC, are the prices you are showing as the other exchanges the asking price, and you guys are essentially tightening the spread? Or are you guys selling parts of bulk orders of the large sell orders directly? How do you hedge your inventory risk?
Great questions.
We offer both options, VWAP and TWAP.
The price on other exchange is based on Google's price of BTC.
We do not market make ourselves. We make it easy for market makers to market make.
Our price advantage you see on the site is based on routing. Different exchanges have price advantage at different times and so we route to the exchange that has the best rate; including splitting your order if needed.
We currently don't show the price advantage of algorithms (very difficult to show without knowing trade parameters).
We do not take any inventory risk.
noname123, is there a way for us to connect. You clearly have experience in the space. We would like to speak with you in more details.
We offer both options, VWAP and TWAP.
The price on other exchange is based on Google's price of BTC.
We do not market make ourselves. We make it easy for market makers to market make.
Our price advantage you see on the site is based on routing. Different exchanges have price advantage at different times and so we route to the exchange that has the best rate; including splitting your order if needed.
We currently don't show the price advantage of algorithms (very difficult to show without knowing trade parameters).
We do not take any inventory risk.
noname123, is there a way for us to connect. You clearly have experience in the space. We would like to speak with you in more details.
Hi akbar123, thank you for being transparent. Unfortunately, I don't think I can contribute that much to your project as my experience is in options trading not at all familiar with the BTC market.
There was one time when I did look into arbitrage across different BTC exchanges, the issue I saw then (which I'm not sure still stands) is that different BTC exchanges had different processing fees that made it prohibitively expensive to arbitrage in practice. For instance, Mt.Gox or something similar had like a 0.15% cash out fee. Not to mention foreign exchange risk if you move money in and out of European exchanges vs. US exchanges.
BitInstant was created I believe to solve this problem, http://en.wikipedia.org/wiki/BitInstant ; by parking money at all of the available exchanges and charging an interest for people to access their funds for arbitrage. They were shut down due to being deemed as a money transmitter operating without license by the New York state financial regulators.
I do think there might be an opportunity for people who trade the US and European BTC market and arbitraging the USD/Euro exchange rate.
Fr example, bitcoin.de has a best bid of 443 euro (or equivalent of 594.13 USD) of almost 3 lots; bitstamp has a best ask of 8 lots at 582.43. If you parked sufficient funds at both exchanges, you can buy at market price at bitstamp 3 lots and sell at market the 3 lots to bitcoin.de, and immediately buy a hedge of USD to Euro by shorting a equivalent dollar amount of the Euro ETF, FXE. Of course, in practice this is difficult to carry out as you have to factor in slippage, commission cost and how exact your hedge is.
Anyways, that's my $0.02; gl.
There was one time when I did look into arbitrage across different BTC exchanges, the issue I saw then (which I'm not sure still stands) is that different BTC exchanges had different processing fees that made it prohibitively expensive to arbitrage in practice. For instance, Mt.Gox or something similar had like a 0.15% cash out fee. Not to mention foreign exchange risk if you move money in and out of European exchanges vs. US exchanges.
BitInstant was created I believe to solve this problem, http://en.wikipedia.org/wiki/BitInstant ; by parking money at all of the available exchanges and charging an interest for people to access their funds for arbitrage. They were shut down due to being deemed as a money transmitter operating without license by the New York state financial regulators.
I do think there might be an opportunity for people who trade the US and European BTC market and arbitraging the USD/Euro exchange rate.
Fr example, bitcoin.de has a best bid of 443 euro (or equivalent of 594.13 USD) of almost 3 lots; bitstamp has a best ask of 8 lots at 582.43. If you parked sufficient funds at both exchanges, you can buy at market price at bitstamp 3 lots and sell at market the 3 lots to bitcoin.de, and immediately buy a hedge of USD to Euro by shorting a equivalent dollar amount of the Euro ETF, FXE. Of course, in practice this is difficult to carry out as you have to factor in slippage, commission cost and how exact your hedge is.
Anyways, that's my $0.02; gl.
Thanks.
We considered adding arb option but after running simulations and accounting for fees and slippage, the opportunity was very small. We also didn't find a suitable hedge to minimize our risk.
We have considered adding option trading; however, given the drop in volume in btc trading, we wonder if there is enough demand for option trading. If others request it, we are happy to build it.
Happy to brainstorm with you if you are up for it. Email added to my profile.
We considered adding arb option but after running simulations and accounting for fees and slippage, the opportunity was very small. We also didn't find a suitable hedge to minimize our risk.
We have considered adding option trading; however, given the drop in volume in btc trading, we wonder if there is enough demand for option trading. If others request it, we are happy to build it.
Happy to brainstorm with you if you are up for it. Email added to my profile.
We are working on adding many more features, and wanted to see features you would like to see built out. We can add more exchanges, offer additional algorithms and offer additional coins and currencies.
Trading is by invitation only. If you want trading access, just pm me or comment below (or send us a tweet).
Trading is by invitation only. If you want trading access, just pm me or comment below (or send us a tweet).
Hi, I don't think many of the criticisms that apparently been up voted are quite fair. Criticizing someone for being new. It's pretty stupid. Criticizing a new firm for not being well known.. Merrill lynch went bankrupt. Bear stearns went bankrupt. The whole industry is gambling what is this need a proven reputation bs..
I do have an important trading question. what are the fees I will pay as a trader using your service?
I do have an important trading question. what are the fees I will pay as a trader using your service?
:raises hand for invite:
Also your 'HN Profile' lacks contact info...
Also your 'HN Profile' lacks contact info...
Hmm. My profile has the email. Are you not able to see it? I can add it to about if you can't see it.
Your email address is private if you put it in the email field. You will need to put all your public information in the 'about' field, so people can see it, I think.
Got it. Added an email
I am interested in trading on this platform as well!
You should be able to register. To start trading, can you please email us the email address you used to register. Email address is no in our profile.
I would love an invite!
[deleted]
How do you differentiate yourself vs something like CampBX, and do you have plans to tackle the regulatory hurdles that they have faced?
We focus on trade execution and providing algorithms previously only available to high frequency traders.
We comply with all regulations. This is not an anonymous site. When you are invited to trade, you will be subjected to full KYC.
Having built 4 payments platforms before, I can tell you that regulation is never easy but very necessary.
We comply with all regulations. This is not an anonymous site. When you are invited to trade, you will be subjected to full KYC.
Having built 4 payments platforms before, I can tell you that regulation is never easy but very necessary.
I can tell you right off the bat, that based on the lack of information on your website or the lack of key identifying/jurisdictional information in your ToS that you do not comply with any US-based regulations regarding money transmission services, nor with any of the European regulations with which I am familiar.
Importantly, despite claiming to be an automated platform for trading on other exchanges, your service will hold funds. This is the very definition of a money transmitter, and also makes you a financial institution under many countries' financial institution laws. As you appear to be SF-based, you're in violation of at least 2 major financial regulatory schemes--not including any state regulations.
Your website is tripping way too many red flags. You need to get these problems addressed ASAP. Bitcoin is not an excuse for amateur hour.
Importantly, despite claiming to be an automated platform for trading on other exchanges, your service will hold funds. This is the very definition of a money transmitter, and also makes you a financial institution under many countries' financial institution laws. As you appear to be SF-based, you're in violation of at least 2 major financial regulatory schemes--not including any state regulations.
Your website is tripping way too many red flags. You need to get these problems addressed ASAP. Bitcoin is not an excuse for amateur hour.
If I were starting a Bitcoin broker, I don't know that I would start it in the US...
Touche
Hi @akbar123 would love to have an invite please :)
Have you registered on the site. I am trying to figure out how to identify people's email. Should have thought about this first :)
Me too!
I'm sorry, did you just say "proprietary algorithms" and bitcoin in the same page?
The bitcoin community has really changed in the last 3 years.
The bitcoin community has really changed in the last 3 years.
I'm sure these guys are very solid citizens but money is money and it makes people do funny things. If there isn't a disclaimer on their site that they don't sell your flow or jump in front of your trades or make money off of you in any way other than a very simple flat fee per trade then you should assume they do.
There is a reason no self respecting hedge fund would use a sell side's algos. If you can't see the source code you don't know that they do the right thing.
These guys might be perfectly honest but then have an error in one of their algos that is only exposed when bitcoin has a very volatile day. What happens then when their algos execute an order on your behalf that you think it shouldn't?
When its your money why take a chance, even if it seems remote.
Again I'm sorry, I fee like a bit of an ass for bringing this up, but until they com out and verify they don't front run you, or sell your flow or make any money off of your trading other than a flat per order fee then you should be skeptical.
And even when they do that, don't use their algos. Most people won't have flow large enough to need to disguise it. Small limit orders can go a long way for most individuals traders.
One other thing that would be good to veriyf is do they guarantee execution at the NBBO (National Best Bid Offer), meaning if 2 different exchanges offer to sell at different prices will they ensure you buy from the cheapest seller?
EDIT They should also fix their private policy. https://s3-us-west-1.amazonaws.com/sf-ox.com/PrivacyPolicyOX...
It is so blurry that I can't read it:(