Exness and the PokerStars

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Many aeons ago, on the top of a building near to Aldgate East, this author had lunch with his then new SEO colleague. Said colleague had spent time at IG but also a few gambling companies. 

A nostalgic smile came over his face as he spoke about how amazing gambling companies are at marketing. You could see the pride he felt in getting people to punt with Ladbrokes. It was a heartwarming moment.

Gambling often feels like a sector with huge crossover to the FX/CFD sector, but then the latter has a lot of weird nuances to it that ultimately mean the comparison doesn’t hold up as well as you might initially think. That Entain and Playtech have both sold off their investments in the sector arguably illustrates that.

Nonetheless, one reader pointed out an interesting move by Exness recently. Followers of the company may have noticed that the broker set up a team of ‘pro’ traders in July of this year, called Exness Team Pro. For example, this is Kojo and he’s a swing trader.

Leaving aside any questions you may have about the definition of the word ‘pro’, this launch was interesting for a few reasons. One was that the members of the team are all from different parts of the emerging market world that Exness targets – LATAM, Africa, MENA, and South Asia. 

All of them appear to have existing social media followings as well. So obviously the idea is to tap into the growth that their audience can provide.

However, the main thing that was striking was the similarity this all bears to something from the online gambling industry. Most notably, the PokerStars website has a ‘pro’ team as well, called Team PokerStars Pro.

Much like the ‘pro’ traders at Exness, these people are selected from around the world. The audience they already have also seems to be of a higher level of importance relative to the actual quality of their poker playing.

And then we have the final piece in this Sherlock Holmes-like tale, which is that the current chief marketing officer at Exness was previously at a gambling company for over a decade. Which gambling company? PokerStars. Go figure!

Checking in with crypto

Whenever you listen to crypto people talk, you usually end up listening to something like…

Crypto is basically an AI-powered digital ledger, using Blockchain ether technology to create liquidity for a decentralised exchange that operates around a centralised, trust-based system for the renewal of smart contracts which use machine learning to deliver SaaS solutions for real time settlement of Bitcoin futures that can be put down as collateral to yield farm Tether contracts or pay for NFTs, which represent fractional ownership in a democratised marketplace where settlement is T-0, rapidly netting off transactions in a process that drastically increases speed and lowers gas fees for market participants, who can retain value due to a Javascript-based limited mining supply.

But what is really going on in the cryptocurrency markets?

This is an area we haven’t looked at a while, mainly because crypto has massively died down. 

“Many of the native tokens released by crypto and blockchain entrepreneurs have not stood the test of time,” noted Andrew Saks, Chief Product Officer at TraderEvolution. “In fact, 3,322 cryptocurrencies that were listed on CoinGecko in 2021, had failed as of February this year.”

A consequence of this is that trading volumes keep going down. If you look at BTC volume, it is now at levels akin to those we saw in late 2020. My sense is that BTC is now basically…

• Market makers 
• Wash traders
• People switching between BTC / USDT and other stable coins
• A bunch of people ‘HODL’ing but not trading.

Wait…wasn’t it always this?

Regardless, some interesting things have been happening in this space recently, particularly on the regulatory front.

For instance, the ‘Travel Rule’ came into play in the EU in June and in the UK at the start of September.

In theory this means that a financial institution which provides crypto services has to identify both parties in a transaction. I’m sure you can segue around these rules in some way but the sense you get is that the walls are closing in on the ability to make transactions away from prying eyes – although this has always seemed like a dumb view to me given that a record is kept of all transactions. 

Not long after that went into play, Chase Bank in the UK announced that it would block all crypto transactions. They claimed that this was because they want to avoid people falling prey to scams.

That’s plausible. What it may also be a consequence of is a fear of falling foul of the travel rule or other regulations. For example, I would imagine there are many scenarios where you cannot identify both sides of a transaction. 

So if I receive crypto from some randomer using a wallet on a completely unregulated exchange, it seems like it would be impossible to capture their details. But failing to do so means breaking the rules. Is there any point taking that risk from a bank’s point of view? My guess is we’ll see more of the pinch on the payments side in the near term.

Next we have something that a friend pointed out, which was Tether randomly telling a client in Singapore that it would no longer take customers from there. Tether’s CTO claimed this has been the case since 2020, but then wouldn’t explain why they sent the email. 

What is interesting here is that Singapore had announced regulations of stablecoins not long before that email was sent. Those regulations included a few things, most notably capital requirements, audits, and a requirement that redemptions be met within five working days of a request. 

Lastly, we had Binance selling its Russian entity to some random company that no one has heard of called CommEX. The company which owns CommEX is based in the Seychelles and no one knows who owns it, which is a very crypto way of doing things.

It’s also easy to dismiss Russia as a two bit market. In reality, it seems like most crypto trading is taking place in countries like Russia, which have capital controls, are sanctioned, or a combination of the two.

For example, if you go on CoinMarketCap, the five exchanges with the largest trading volume over the past 24 hours are…

1. Binance
2. IndoEx
3. Bitspay
4. Topcredit Int
5. Bitforex

Yup, I haven’t heard of half of them either.

Now if we go through them in order then you can see that the top five countries for traffic to these websites are…

Binance

1. Russia
2. Turkey
3. Argentina
4. Ukraine
5. India

IndoEx

1. Indonesia
2. Bangladesh
3. Ukraine
4. Nigeria
5. Belarus

Bitspay

1. Belarus
2. Indonesia
3. Nigeria
4. Ukraine
5. Russia

Topcredit Int

1. Italy
2. Slovakia
3. France
4. Romania
5. Hungary

BitForex

1. Japan
2. India
3. Turkey
4. Indonesia
5. Brazil

I would note that Topcredit may seem like an outlier. However, if you actually look at what people are searching for to reach the website it is primarily in Chinese. This suggests people in China are using VPNs to access their website, as they would be for all of these exchanges given the restrictions that exist on crypto in China.

It’s also not clear who actually owns any of these exchanges, apart from maybe Binance. BitForex and Topcredit appear to be Chinese. IndoEX and Bitspay are more of a mystery.

Then you look at volume. According to CoinMarketCap, the five most traded cryptos in the last 24 hours are….

1. USDT ($12bn)
2. BTC ($7.5bn)
3. ETH ($3.2bn)
4. USDC ($1.5bn)
5. BUSD ($430m)

Assuming, and I accept it’s a big assumption, that the trading on these exchanges is actually real, then this would suggest that crypto is increasingly just a way for people to access dollars in countries where it is difficult to do so. Not a very crypto-y outcome, given that the crypto ‘raise d’etre’ is to replace fiat.