$Diginex(EQOS)$
Sharing thoughts on Diginex’s “Short selling” article:
1) In my opinion, Diginex's key product -- EQUOS exchange -- has a reasonable good prospect to become more successful given it is in the direction of becoming regulated/compliant and could be an acquisition target by those "unregulated" competitors who want to "come clean".
2) Looking at the published financial figures of Diginex so far could give you a distorted (and under-estimated) picture, because it doesn't account for the crazy crypto bull market since December till now. Trading volume has experienced a huge spike over the last three months.
3) Diginex's EQUOS exchange is focusing on compliance/regulated route, and they need to launch products and ramp it up very carefully. That being said, it is reasonable that it cannot blindly chase the trend and offer some "lucrative yet unregulated" product as Binance did for the DeFi thing... so it's really unfair to just use coinmarketcap ranking (which simply looks at trading volume) to blame EQUOS... Plus, the ranking & the numbers themselves in these website are distorted because nowadays many players have been engaging in some "wash trading practice" in the crypto industry... I'm not saying EQUOS wouldn't do that but it's less likely to do so as it is a public company which needs to be audited each year. ( And don’t forget, EQUOS’s trading volume did increase from nothing to nearly 90M per day as of today within not more than a year)
4) Blaming Diginex's past “history” before 2020 is also unfair. The company has obviously undergone an internal reorganization either in terms of shareholding or busines focus; their original founder faded out of the picture and the new boss/new team is shaping the new business & ecosystem of the company, and the new management team has taken the company to a much higher level (becoming the world’s first listed crypto exchange company ahead of all other competitors.. just think about it, what a phenomenal accomplishment!) Given the restructuring in 2019~2020, it's really not meaningful to compare its numbers as of now versus those in 2019 because it's like comparing apples & oranges.
5) I don't see any credible basis to attack the security of EQUOS exchange also… the author cited some lack of actions by the SG regulator over securities cases. Firstly, when we talk about "security" of a crypto exchange we normally refer to cyber security - i.e. you should not be hacked and lose client's money. The author was completely silent on this issue when he criticized the "security" of their platform whilst only citing unrelated cases.
Secondly, and without any sarcasm, Singapore has been widely recognized as the most forward looking and friendly regulator yet at the same time in a “major and reputable” jurisdiction.. (i.e. not the jurisdictions like Seychelles) SG has very stringent standard in licensing and monitoring crypto (or broadly speaking, payment) service providers yet it provides a clear licensing route for the exchange platforms. That is why, all major crypto firms, including Coinbase, Gemini, Binance, you name it.. are applying for a crypto license in SG and use SG as their entrance to Asia.. It's completely unfair to ignore this fact and purely use unrelated cases to discredit Singapore's regulatory environment and hence the security of Diginex.
OK.. After refuting some funny & unfounded arguments raised in the short selling article.. Let me list out my bullish cases for Diginex. (Disclaimer: NOT as investment advice but purely point out some facts)
1. From an outsider’s perspective, Diginex management has a longer term vision to position itself as the "regulated & compliant" crypto firm and they deserve a higher valuation. It has the dedication by listing the company
and disclose its strategy to the public. Interestingly and don’t forget, only
these regulated companies will be able to attract institutional (i..e deep
pockets) investors in the long run. From an investment fund perspective, it
would be easier to invest in a "SEC approved/publicly traded" company
versus a PE round / cash-burning startup.
2. The "premium" for regulated crypto firms are huge.. Comparing Binance & Coinbase – Binance is ranked No.1 of all crypto exchanges with 12X trading volume (66B vs 5B) of Coinbase, BUT the market cap of BNB token vs COIN shares are about the same (i.e. the premium of being regulated is 10X).
(to be continued…)