We only make use of the best and most trusted service providers in the industry:

  • Circle.com - The company that mints your USD into USDC
  • Binance - The exchange from which we purchase digital assets in the US
  • LUNO / VALR / OVEX - The local South African exchanges at which we sell

Your funds are firstly sent to Circle. This is the first step in the arbitrage process but also the most crucial. If your funds can't reach us, we can't initiate the trade.

How safe are my funds at Circle?

You have probably read in the media that there have been stablecoins becoming "unpegged" to the dollar. For example, 1 UST is no longer equal to 1 USD. This brings up the question of just how reliable Circle's stablecoin is. The main reason why it is extremely unlikely that USDC will ever get unpegged, is because Circle keeps a 1 to 1 ratio for each minted USDC in their bank account. If you have 100 USDC, then you know that Circle has 100 USD in their bank account. It therefore cannot get unpegged unless those funds ever go missing. That is even more unlikely as they are audited monthly. You can read more about the process here.

Once the funds arrive at Circle, they are almost immediately sent to our Binance account where they are usually traded immediately or within a few minutes after arriving. The time the funds are kept in our Circle wallet is kept to a minimal.

How safe are my funds at Binance?

Binance is one of the world's most prestigious crypto exchanges and have essentially established their position as the number 1 crypto exchange in the world. They have been hacked before, back in 2019 but using their Secure Asset Fund they were able to easily cover the loss. In other words, Binance is transparent about these events and they have policies and processes in place to limit any damage that might occur.

Despite the funds being very secure at Binance, they are not there for a long time. As mentioned, the funds are traded immediately and the coins purchased are sent to one of the South African exchanges.

How safe are my funds at VALR/LUNO/OVEX?

Luno has been around since 2013, Ovex since 2017 and Valr since 2018. While the latter two are younger than Luno, just like Luno, both have solidified their place in the South African crypto eco system. They are undoubtedly some of the biggest players, if not the actual biggest players.

There have been no major incidents at any of these exchanges and none of them have ever stopped operations. However, what makes each one reliable comes down to each individual companies policies. OVEX has a $100 million insurance policy underwritten by Lloyds of London for any loss suffered to client funds. Luno offers a wide range of security features described here and Valr describes theirs here.

Ultimately, all three of these exchanges are world class and we put a lot of trust in them. We do spread our risk a bit by making use of multiple exchanges but ultimately these three exchanges are of high importance as this is where the the funds ends up as ZAR.

What happens with the ZAR at the exchanges?

These funds are transferred back to our bank account and then paid out to clients. This final step comes with a daily audit where we ensure all calculations are correct, the correct deals were assigned to the right people, the correct amounts were retrieved from the exchange and essentially many other steps that ensure everything is correct before clients are paid.

Koinexpert Arbitrage Services (Pty) Ltd. is registered with the Financial Intelligence Centre. This means our practices follow financial industry standards and we comply with the FIC Act regulations which include reporting as well as financial audits.

Are there any other scenarios I should be concerned or aware of?

We follow best practices, including white listing addresses, limiting access to our systems, requiring military grade authentication for admins via Yubikeys, make use of automated penetration testing, thoroughly validate our clients and much more. This means that we take security very seriously and by doing so, we severely limit attack vectors on our systems.

Does that mean it is risk-free?

When dealing with cryptocurrencies, the risk is always higher than with current conventional financial services. We hope this will change when new regulations come into place sometime in 2023 but until then, clients do have to understand that cryptocurrencies inherently come with more risk. We therefore still believe in the age old saying: "Don't risk more than you are willing to lose."

We have not had any security incidents since inception, nor have we ever had a case where clients did not receive their funds. We intend to keep this trend at all costs by maintaining our current best practices and sticking with only world class service providers.

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