The official announcement of bankruptcy filing by FTX, one of the most influential digital asset exchanges worldwide, has brought the world of cryptoassets into the limelight. While investors frantically withdrew their funds, the exchange's bankruptcy and the estimated billion-dollar debts owed to its primary creditors came into effect.

On the other hand, a market with tremendous potential and in full development suffered a severe setback in terms of the confidence of its investors and supporters.

Although this scenario still concerns many in the world of cryptoassets, it doesn't bother those who understand that security and regulatory advancements are crucial to creating a solid and unshakable community.

With a strategy focused on regulated companies since the beginning of its operations, Parfin has in its portfolio solutions designed to mitigate clients' exposure to counterparty risks, such as those seen in the FTX bankruptcy.

With a modular platform that is agile, secure, and robust for risk management, Parfin enables its clients to perform custody, trading, and management of digital assets within a highly decentralized counterpart ecosystem in a single environment.

"When you spread your operation across several counterparties, you avoid concentrating all your risk on just one of them,"

Parfin is a leader in web3 infrastructure in Latin America and its systems were structured to reduce users' exposure to risks.

"Our approach to operating in the market and handling cryptoassets was designed for total control and minimum possible exposure to counterparties," adds Bohn.

Bohn believes that market professionalization is one of the industry's great challenges and that the increase in regulatory oversight will have quite positive consequences in the long run.

Traditional markets as a reference for secure practices 

Numerous problems related to FTX's bankruptcy are linked to low levels of requirements regarding practices considered trivial in traditional financial markets. For Cristian, industry players overlooked the fundamentals and relied on trust to make deals.

"In traditional markets, brokers do not lend without collateral, they request financial statements, perform KYC processes, due diligence... these are things that clearly were not being done (at FTX)," added him.

"In a traditional financial institution, you don’t operate with a prime broker, but rather with multiple ones. We’re talking about years of best market practices. The crypto world is a less mature ecosystem, with lots of tech people who do not have as much experience and knowledge of traditional markets. And what sets Parfin apart is precisely that, bringing together experts in tech, traditional financial markets, and web3."

Cristian Bohn
Parfin CSO

 

Mitigating counterparty risk at Parfin

Treasury management
Control asset exposure in real time, integrated across counterparties and Parfin's custody.

Smart Order Routing: Execution on multiple counterparties
Diversify counterparty risk by adding redundancy to the operation and achieving the best execution 95% of the times better than with a single counterparty.

Post-trade Settlement (PTS)
Minimize counterparty risk exposure through platform-integrated post-trading settlement.

"Parfin Platform is a fundamental tool for those who want to enter the market. With it, the exposure window to counterparty risk is very low, and this type of control is extremely relevant for institutional investors."

Cristian Bohn
Parfin CSO

Explore our tools: CaaS and MPC Custody.

Institutional investor: steer clear of risks!

As this article has shown you, Parfin can assist you in managing counterparty risk in the cryptoasset market. Parfin's solutions deliver unparalleled security and ease of use.

Interested in talking to our experts and finding out how we can provide your institution with the support it needs to enter a groundbreaking market? Head to parfin.io and book a business appointment!