

Show HN: First US-based Bitcoin broker - akbar123
http://www.sf-ox.com

======
chollida1
I've typed and deleted this comment about 4 times now as I can't write it in a
way that doesn't seem insulting.

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...](https://s3-us-
west-1.amazonaws.com/sf-ox.com/PrivacyPolicyOXLabs.pdf)

It is so blurry that I can't read it:(

~~~
akbar123
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.

~~~
jmathai
> Fixing the privacy policy - not sure what happened to the pdf upload. Thanks
> for catching.

I've never seen a privacy policy as a PDF. Any reason for this?

~~~
akbar123
No reason.

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pmorici
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...](http://www.reddit.com/r/BitcoinMarkets/comments/2c1oo5/first_us_based_bitcoin_brokerdealer/)

~~~
akbar123
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.

~~~
bdcravens
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?

~~~
tonyhb
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.

~~~
akbar123
Our banks have reviewed our model. Banks can always change their mind which is
why we work with multiple banks.

------
joosters
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.

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noname123
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?

~~~
akbar123
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.

~~~
noname123
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](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.

~~~
akbar123
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.

------
akbar123
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).

~~~
stevenrace
:raises hand for invite:

Also your 'HN Profile' lacks contact info...

~~~
akbar123
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.

~~~
FatalLogic
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.

~~~
akbar123
Got it. Added an email

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anmilo
How do you differentiate yourself vs something like CampBX, and do you have
plans to tackle the regulatory hurdles that they have faced?

~~~
akbar123
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.

~~~
gamblor956
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.

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hardwaresofton
If I were starting a Bitcoin broker, I don't know that I would start it in the
US...

~~~
akbar123
Touche

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eddywebs
Hi @akbar123 would love to have an invite please :)

~~~
akbar123
Have you registered on the site. I am trying to figure out how to identify
people's email. Should have thought about this first :)

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vitno
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.

