Swyftx and Superhero Demerger

Swyftx and Superhero Demerger

Robert McDougall

January 12, 2023

Cryptocurrency

In June 2022, cryptocurrency exchange Swyftx and superannuation platform Superhero announced a historic $1.5 billion merger that would combine 800,000 customers under one powerhouse. The merger was intended to be an "evolution from disruptive tech players into a single, major financial institution that can grow across domestic and international markets".

However, in December 2022, it was announced that this merger would no longer occur, and plenty of questions were being asked by the crypto community. Did FTX's collapse have a larger effect than expected? Is Swyftx running out of money? Were there irreconcilable disagreements between Superhero and Swyftx?

Amidst all the speculation around why Swyftx and Superhero walked away from this merger, we decided to reach out to Alex Harper, co-founder and CEO of Swyftx, to set the story straight.

What are the main reasons behind the Swyftx demerger?

"

Swyftx took the decision to demerge from Superhero because we couldn’t put a timeline on when, or even if, we’d ever be able to integrate the two platforms in the current regulatory environment. A few months after we announced the merger, the Australian financial regulator told investment platforms that they should be very careful about combining crypto and trad-fi on a single platform. The announcement was a a surprise to the market and did leave Swyftx with a pretty difficult choice. Wait and hope that we might one day be able to integrate? Or rewind the merger and reduce uncertainty for our customers? Ultimately, we decided it was in the best interests of both Swyftx and Superhero to demerge and just focus on our core offerings. It was obviously disappointing for both teams but our strategy hasn’t changed. We still want to add more asset classes to our platform when the time is right. That means we need to carry on working closely with the Australian government and regulators to ensure Aussie crypto users are appropriately protected.


Alex Harper CEO and co-founder of Swyftx

We can see that the Swyftx demerger was not due to any financial issues of the exchange, nor was it caused by conflict between Swyftx and Superhero. It appears that the issue was tight Australian regulations that threw uncertainty into the equation.


What does the demerger mean for Swyftx users?

"

We're in a strong position after the demerger. We’ve no longer got obligations of any kind to Superhero, which frees significant resources to focus on our core offering. Also, as sad as it was to announce the demerger, the work we did on regulatory compliance in anticipation of integrating with Superhero wasn’t wasted. It means we’re now probably further down the track than any other Aussie exchange in terms of being ready for new industry rules. We’ve got bank-grade security, we use arguably the most secure custody solution available on the market, we’ve got sophisticated fraud prevention and recovery systems, we hold customer assets one to one and, so far as we can tell, we’re one of the only Aussie crypto businesses that allows you to easily search its financial audit on the ASIC register.


There’s a reason we are by a distance the top-rated and most trusted exchange in Australia. It’s because we take, and have always taken, transparency and customer experience more seriously than anyone else.


Alex Harper CEO and co-founder of Swyftx

Excellent news for Swyftx users, as the exchange is now one of the industry leaders for regulatory compliance. It has always been, and remains an extremely safe platform, with bank-grade security systems and protocol, and holds all customer assets 1:1.


How can Swyftx users trust that the exchange will not pause withdrawals, or file for bankruptcy?

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There’s really two main ways Aussie crypto users can gauge if they’re using a secure exchange that isn’t susceptible to any kind of liquidity event. First, has your exchange publicly affirmed through our industry trade body, Blockchain Australia, that it holds your crypto balances one to one, and 100% in full reserve? Swyftx is one of 14 exchanges operating in the country that’s been able to sign this affirmation.


Second, is your exchange transparent? Do you know who runs it? And can you easily search their financial audits through the financial regulator? Swyftx lodged its latest financial audit with ASIC very recently, which gives our customers full insight into our very robust financials.


Ultimately, whether you intend to use Swyftx or another exchange, just do your research on the business and the people behind it.


Alex Harper CEO and co-founder of Swyftx

A lot of crypto investors are wary of placing their trust in centralized exchanges after the FTX collapse, and the subsequent bankruptcy of platforms that were exposed to FTX. Swyftx assures their users that they have no need to worry, as they are one of only 14 exchanges in Australia that can prove they have each customer's assets in full reserve. Swyftx customers will always be able to withdraw their cryptocurrency when they want, and can view Swyftx's audits to verify their financial position.


There is talk about the Albanese government introducing legislation this year to regulate crypto trading. What does this mean for Swyftx and Aussie crypto investors in general?

"

Swyftx has been a strong public advocate for regulation and we work closely with Australian ministers, policy makers and regulators to support their work on developing new rules around crypto. One of the most important use cases for crypto and blockchain is that it’s a ‘trustless’ technology. It has the potential to transform the financial sector and its fundamentals haven’t changed. But unfortunately, the failure of FTX has seriously undermined trust. You can argue all you like about the fact FTX was an example of old-fashioned business fraud, not a crypto failure, but you are not going to regain faith in the sector until there are proper rules in place around areas like custody, disclosure, security, fraud prevention, capital adequacy and so on.


Swyftx is already well positioned to enter this regulated environment. In fact, our ambition is to be the first exchange in the country to meet the new obligations.


In terms of what regulations will mean for Aussie crypto users, it’s too early to tell. We don’t know what the new rules will look like. Our hope is that they’ll better protect consumers from poorly run businesses, without restricting the local industry to the point that the best local blockchain and crypto projects can’t innovate in the interests of crypto users. It’s important for policy makers to remember that exchanges like Swyftx don’t exist because we want them to, we exist because Aussie crypto users want us.


Alex Harper CEO and co-founder of Swyftx

Swyftx is ready for increased regulation around crypto trading, and collaborates with Australian authorities to ensure this happens smoothly. No one knows what the new regulations will be like, but hopefully it provides protection to crypto users, without suffocating innovation. 

Marketplacefairness.org provides all its content for informational purposes only, and this should not be taken as financial advice to buy, trade or sell cryptocurrency or use any specific exchange. Please do not use this website as investment advice, financial advice or legal advice, and each individual's needs may vary from that of the author. This post includes affiliate links with our partners who may compensate us. 

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