Ex-Citadel dev turned crypto exchange founder has a plan to prevent the next FTX – DL News

As disgraced crypto exchange founder Sam Bankman-Fried braces for sentencing this week, the industry is amping up efforts to prevent the kind of fraud that led to FTX’s downfall.

One of these initiatives comes from Cube.Exchange, a trading platform launched in December by co-founder and CEO Bartosz Lipiński.

Cube is technically a centralised exchange, like Coinbase or Binance, but its infrastructure mirrors decentralised exchanges like GMX in a crucial way: The Cube team does not have unilateral control over customer deposits.

“From a custody perspective, our solution is unique, because we’re building a decentralised Fireblocks,” Lipiński told DL News. He is referring to the platform that helps institutions like BNY Mellon hold cryptocurrencies securely.

“But we are offering it at zero cost,” he added.

‘Guardian Council’

Lipinski jumped to crypto in January 2021, joining Solana as a software engineer, after years in the finance industry. He worked as head of equities application development at Ken Griffin’s hedge fund Citadel, and before that, was lead developer at JPMorgan.

Customers can deposit funds on the exchange and use the platform with the same ease as with any centralised exchange.

But trades are settled on-chain, which means users can track in real time where their funds are. Other exchanges, like Coinbase, lump these funds together in cold storage.

Cube is now launching what it calls a “Guardian Council” that will act as a third-party validator group to prevent the platform from misappropriating customer funds.

These guardians are involved in the transaction authorisation process, meaning that Cube isn’t capable of manipulating user funds. And in event of an exchange failure, the guardians are able to facilitate withdrawals.

In other words, Cube’s infrastructure should make it impossible for users to suffer the same ordeal as when FTX collapsed.

Initial guardians include the Solana Foundation and crypto staking service providers Everstake, Kiln, and Juicy Stake. Triton One, a specialised crypto infrastructure server provider, constitutes the fifth member of the council.

Lipiński says he expects the list to grow.

Broader impact

While the exchange isn’t listed yet on crypto price aggregation sites like CoinGecko or CoinMarketCap, Lipiński told DL News that it processes $1 million in daily trading volume.

And he expects more interest as Wall Street wades deeper into the crypto space.

“Over the long run, there will be more people that directly integrate with the blockchain itself,” said Lipiński. And they’ll want cheaper custody offerings.

“Those custody providers will ultimately drive the costs of the Bitcoin spot ETFs in the long run,” Lipiński said, adding that some market participants have already reached out to use Cube’s technology.

Another of Cube’s advantages lies in its focus on speed and performance.

The exchange is capable of filling trading orders within 0.2 milliseconds — about 10 times faster than Coinbase and 25 times faster than Binance.

Cube raised $12 million in a Series A funding round in February, three months after raising $9 million for a seed round. The company is valued at $100 million, according to The Block.

Tom Carreras is a markets correspondent for DL News. Got a tip about centralised exchanges? Reach out at tcarreras@dlnews.com