Business 18 January 2019

Erik Gibbs

Questions arise over DX.Exchange’s legitimacy

Announced earlier this month, the DX.Exchange promised to give cryptocurrency fans the ability to use their assets to trade in companies on the NASDAQ stock exchange. The company is reportedly based out of Estonia and powered by NASDAQ’s Matching Engine Technology and its collaborative effort with NASDAQ should give the firm a certain amount of credibility. However, questions about the company are now being raised after it was discovered who actually owns most of the operations.

Crypto and blockchain news outlet CCN says that it has determined that DX.Exchange is owned by Limor Patarkazishvili. Patarkazishvili is most familiar for previously having owned 90% of SpotOption, a binary options platform that was headquartered in Israel until it closed last month.

SpotOption provided binary trading to Israelis, but became caught up in what Israeli news outlets described as a fraud. While binary options are legitimate products, an overwhelming amount of fraud was found in the segment, leading to the Israeli government instituting a ban on the entire industry in January of last year.

Patarkazishvili’s former company had at least 300 affiliates to which it offered back-end services. The company also offered white-label products to other firms that could then use them to brand and market as though they were legitimate binary options.

Last January, SpotOption found its offices in Israel the target of a raid by the U.S. FBI and local Israeli authorities. They were on a mission to find the CEO of Yukom, Lee Elbaz, who had signed up to use the SpotOption platform. Elbaz had been sought by officials on charges of fraud over his alleged involvement with a sham binary options platform. She was finally arrested as she tried to enter the U.S. and her trial is currently underway.

CCN adds that SpotOption was founded by Pinchas Peterktzishvilly, also known as Pinhas Patarkazishvili or Pini Peter. He was convicted in 2007 of having embezzled close to $68 million at Israel’s TradeBank.

Despite that conviction, Peter was ultimately given the authorization to launch his binary platform and then gave most of his control to his wife, Limor. SpotOption has apparently been closed since at least December of last year.

Only a few days after it launched, DX.Exchange was already finding trouble. It was reported that the exchange had a serious security vulnerability that would allow virtually anyone to gain access to other accounts.

The company denies any involvement with anyone from SpotOption – odd, considering its parent company, Coins Marketplace Technologies, is owned by the former owner of the now-defunct company. In a Reddit post, it asserts, “We received several questions about a company called SpotOption and we wish to clarify that Dx.Exchange is not associated to SpotOption in any way. In our Israeli branch we have hired some former spotoption [sic] employees, but also hired many more from the banking industry and online industry in all our business divisions…”

That statement directly contradicts the official documentation for Coins Marketplace, as presented by the Estonian government. It clearly states that the only shareholder in the company is Limor Patarkazishvili.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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