Shanghai-based LakeBTC, a Big Four exchange in Coindesk’s Bitcoin Price Index (BPI), will soon offer EUR and GBP trading with bitcoins. Over the weekend, allcoinsnews.com conducted an interview with LakeBTC CEO Thomas Xie.
Thomas Xie, LakeBTC CEO
allcoinsnews: My first question is about the history of LakeBTC. Who are the founders? You are in the Coinbase Big 4 index. What sort of volume do you do now in bitcoin (BTC)? How did you grow from the start? Have you raised venture capital?
Thomas Xie: LakeBTC was started in March 2013 as an exchange initially for a small group of traders and other financial professionals from investment banking and commercial banking sectors. These early users and investors helped shaped LakeBTC with their years of experience trading bonds, currencies, commodities, and all types of derivatives and structured products in financial markets.They know capital markets inside out, and they trade Bitcoins as a hobby, just like playing Texas hold’em. Later that year, we decided to incorporate and run the exchange under the current domain name. Naturally, our investors and many of the people we recruit have extensive financial experience, and this is one of the important differences than other players in the field. We are one of the big four bitcoin exchanges that determine CoinDesk BPI and a Gateway member of IRBA. We are also included in TeraExchange’s bitcoin index, which is the base of their US CFTC approved bitcoin swap, and our data is included in a number of leading bitcoin websites.
We are dedicated to building a fair Bitcoin platform with top security, excellent liquidity, and extraordinary customer service. As crypto currencies gained more and more exposures to the general public, LakeBTC is becoming a leading Bitcoin platform around the globe. Our years of risk management and internal control experience in financial industries build the most solid foundation for ensuring customers’ fund and privacy being safe and secure.
Additionally, creating a fair and efficient marketplace is also important to protect investors’ interests. We do everything in our power to minimize market manipulations and unfairness. Market surveillance programs, carefully designed products, comprehensive risk management, and strict internal controls are all meant to ensure this young and energetic market be fair and safe to every participant. At LakeBTC, users are best protected from financial predators, bitcoin theft, online fraud, market manipulators, trader errors, bot bugs, and flash crashes. We provide the same level of service to all users at all times. All users are treated with the same policy published on our website.
Trading volume really depends on the market conditions. It varies from a couple of thousand to over 10 thousand.
We have initial investors, but we have not raised any external funds yet. Some potential investors got in touch with us, and it’s ongoing.
allcoinsnews: You exchange offers USD / BTC trading now. I know that you will offer EUR / BTC trading very soon. When will this happen? What other services or currencies will you support in the near future?
Thomas Xie: To better serve our customers’ needs, we are constantly looking for banking and payment processing partners around the world. We added Ripple network and EgoPay, and we became a Gateway Member of International Ripple Business Association.
To better serve our European customers, we are finalizing partnership details with our payment processing partner in Europe, and plan to launch the service later this year. EUR and GBP will be included in the first phase, and multiple payment methods including SEPA will be added. It’d be much easier for Europeans to make deposits and withdrawals to/from LakeBTC at a much lower cost. With LakeBTC’s outstanding security, great liquidity, and superb customer service, we expect to see a sizable BTC/EUR trading activities.
We are also working with partners in North America, Africa, Southeast Asia, and South America to introduce more local payment methods and streamline the deposit/withdrawal processes.
allcoinsnews: How has the volatility of BTC affected your business planning?
Thomas Xie: Volatility definitely has an effect on market sentiment. Bitcoin is just a few years old, and this volatility is not surprising. As a matter of fact, when you look at the historical prices, what we see today is much smaller. On the bright side though, the volatility and the speculation help bitcoin stay on headline news and get more coverage from the media.
To any exchange, an effective market surveillance program is a critical component that ensures the fairness and smoothness of the marketplace. Unusual activities, abnormal positions, sudden price changes, and suspicious trades should raise alarms to exchange operators and if necessary, preventative actions should be taken quickly to mitigate the
risk of price manipulations and human errors.
LakeBTC have a real time market surveillance program to monitor unusual trading activities and suspicious positions. By comparing with bitcoin index prices from other sources, we try to reduce the risk of market manipulations by individual attackers. This is especially important for a volatile market such as bitcoin. We shifted an enormous amount of effort into this, including market surveillance, limited orderbook, dark pool, product design, staff training and so on.
Other than that, we do plan to launch bitcoin derivatives such as futures to help miners, exchangers, merchants, and institutional investors to better manage their risks and exposures.
allcoinsnews: Your exchange is in English, Swedish, and Chinese. What is your analysis of what countries your users are from?
Thomas Xie: We have users from all around the world, with a better concentration from Americas, Europe and southeast Asia.
As mentioned earlier, we are adding banking and payment processors all around the world. Besides, we are currently working on adding more languages as well to bring better experiences to non English speaking users.
We offer a comprehensive and secure REST and Websocket API, with sample codes in PHP, Ruby, Python, and a few other programming languages. Professional algorithm traders would find it extremely easy to integrate their trading bots to LakeBTC. Our website design is responsive, and works equally well on mobile devices so casual users may buy and sell bitcoins on their cell phones smoothly.
We just made a major change to our fee structures, with maker-taker introduced and a big promotion is going on right now. Users may enjoy a 0.05% or even free trading at LakeBTC. All of these strategies will further grow our user base globally.
allcoinsnews: There have been some significant exchanges that have collapsed with hacking being an important factor (e.g. Mt Gox, Bitcoin Trader recently). How are you protecting your customers funds from this type of risk? In terms of wallets, what do you think is best solution for your customers?
Thomas Xie: The founder of Mt.Gox came from a technical background, but running a financial firm requires many years of risk management and internal control experience. That’s not something you can acquire overnight.
The safety of the wallet is indeed a huge challenge. Average users may choose and trust a professional bitcoin company such as LakeBTC, especially if it’s a lot of money. They should pick one who’s secure, legitimate, compliant, and well managed. Professional users who know what they are doing can manage their own wallets.
Security, liquidity and service are three strengths we have and security is number one. SSL encryption, cold storage, Google Authenticator, SMS confirmations, etc. are several technical measures we currently employ. But people have to realize that a Bitcoin exchange is not only a technology company, but more importantly, also a financial one.
If Facebook went under, it’s bad but people can live with it. Same thing for Amazon, Youtube, Uber and so on. But if your bank failed and all your savings vaporized? That’s horrifying.. A financial firm faces many security challenges that are unheard of typical technology companies. The technological security mechanisms mentioned above are certainly important, but what really matters to financial institutions are risk management and internal controls. Our team with years of experience in financial industries is working hard to ensure customers’ fund and privacy being safe and secure. For example, all withdrawals need to pass an automatic system checks for book balances, login history, trading patterns and so on, then passed to a two level manual approval process. If everything is good, the fund is transferred to the customer. We do everything in our power to minimize the risks of human errors, system bugs, and hacking activities. Incidents such as transaction malleability would not happen at LakeBTC.
allcoinsnews: Many governments have concerns (e.g. China, USA, etc..) about crypto currencies. How will the Chinese cryptocurrency develop going forward?
Thomas Xie: First of all, we are a BVI company, with customer service and technical support in Shanghai. LakeBTC is a bitcoin exchange for the world. We pay attention to the government policies around the world and do our best to stay compliant. We believe this is to the best interest of all our users.
Chinese government clearly stated that bitcoin is not a currency and would not regulate it as a currency. Secondly, the policy is in fact quite easy on bitcoin participants. The latest official policy declared that people have the right to own, buy, and sell bitcoin. The major goal of the existing policies is to manage risk and stop market manipulation. Margin
and shorting trading, futures, and many other high-leverage products (20 times or even higher) and price manipulation caused flash crashes early this year and that’s the target of the so-called ban. If the situation does not improve, we are not surprised to see the policy tightens further and the entire bitcoin ecosystem is jeopardized.
US is more complicated. Both federal and state regulators are involved. The most recent NY DFS proposal is not considered a positive sign. We are living in the new millennium now and they government agencies need to adapt to the digital age too. It’s impractical and cumbersome for every state plus Fed to come up with a regulation each separately. Bitcoin is an internet thing and there’s no state borderline on the internet after all.