One of the problems I see in crypto and fintech startups is these startups like to handle customer financial accounts like wallets which is not a primary element of their business model. When you start handling customer funds or any account funds, you should expect to crash and burn or go to jail if you don’t know what you are doing. Fund accounts are heavily regulated and enforced with heavy penalties from financial crimes division in governments around the world. 

The biggest issue and critical mistake of Sam Bankman-Fried and FTX was playing with customer accounts. The lying to investors and spending the VC funding on personal loans which is known as redirection is going to get him time but redirecting his own customers’ accounts is going to put him under the jail, trust me on that. The main point of this article is to make sure you understand to stay away from dealing with funds and assets altogether and just focus on the primary business which is bringing buyers and sellers together. 

The problem with handling crypto and other assets within your business model is you are quickly denied a business bank account when trying to open one up. You going to find it hard to engage in other transactions because people see you managing retail customers' accounts as a red flag for mishandling of funds. When you create a digital-first business, especially fintech or crypto, you need to model yourself after real-world financial services and financial support firms on Wall Street. 

If you going to create an asset exchange, you only need to focus on order matching, order tickets, and proof of settlement. Your exchange receives orders from brokers, your matching engine finds the best path to fulfilling a buy/sell order and you produce a binding order ticket where the broker and custodian do their part to transfer the assets and funding. All you do and all you should ever do is just make sure the brokers and custodians do their part. 

It is important you have real chooms as your team. Real chooms don’t say dumb, lightweight stuff such as they don’t like the UAE or hate New York or any other region and are ready to go with you where the money at. Nobody needs a fake choomba talking about whether they want to work from home in a startup, tell them to go work as a corpo if they feel that way. You need chooms that know the technology, and the business model and have the actual skills to get things done. Also, you need to make sure each and every choomba on your team adheres to ethics and professionalism and has the power to raise their hand and speak out if something is not right. But look at FTX – those folks all going to jail or going to be disgraced. 

The wrong way and what we see from all the current crypto exchanges is they handle both the institutional partners and the retail customers, trying to be everything or all-in-one. The reason why it is wrong is that it allowed FTX to perform the activities they have performed such as raiding customers' accounts to take risky bets or engaging in shady financial shell games. The problem is then they have to focus on the Ponzi scheme of trying to fund the accounts they messed up with the new customer's money until the whole thing fall apart. 

In your crypto exchange implementation, you make sure there is a separation of duties and segregation of agents. The reason you have segregation is so each agent such as the broker and custodian works on their client's behalf. 

In the diagram, a bourse is a stock exchange term used outside of the USA, you going to be international so learn the term. The broker is the individual that places orders on behalf of customers similar to a stock broker or a mobile app that allow individuals to place an order. The custodian holds the actual assets and has a process in place to notify the owner of the asset and work to transfer the asset to the new owner. The bourse's job is to create the order ticket and make sure the order ticket is fulfilled during the settlement process. The bourse bills the broker and custodian fees and commission on the trade order size which is a wholesale price to what brokers and custodians charge their clients. 

Using blockchain technology and PKI, everybody signs the blockchain-based order with their digital signature and the bourse has automated validators to know when to verify the signatures and create the trade ticket order to be fulfilled. The custodian and broker sign the blockchain once they have done their part to pay the custodian the funds and the custodians performed the transfer. Everybody in the ecosystem performs invoicing/billing. It is important a cash deposit should be required to ensure balances are payable. 

There is one issue for Dream and Hustle Early Adopters who supported this blog – they don’t have to build a damn thing – this is how DBEXX was actually designed and built. We already had a custodian and broker separated from the exchange core and the focus is on trade order fulfillment using Toshikiso BlockchainTX transfer, Toshikiso Account Ledger, Toshikiso Digital Asset, and Toshikiso blockchain validators – yeah, look at the rest of yall - kinda sucks to be ignoring and doubting on a brotha who worked in silence and moved in silence but you forgot was a real professional and legend in the game, huh? 

Dream and Hustle Early Adopters can set up shops using DBEXX with their chooms, settle in Dubai on a crypto free zone visa, buy houses, buy Dubai villas using Islamic funding (1% for 100 months – no down payment) to rent out Airbnb to pay for itself, go buy the new Range Rover HSE they already had over in Dubai before America got it, operate tax-free and keep all the cash they made and see the whole system is actually automated – generate trade orders, use blockchain technology to make sure order fulfilled, then bill and receive payment electronically into the corporate accounts. Can set all this up and get resident cards for Dubai and DMCC office suites in Jumeirah within months. 

Our advice is simple and I learned this with Kossier early on with our platform – let the financial people handle the financial stuff. We work as digital brokers and platform owners to facilitate processes – that’s how you focus on building digital-first enterprises that can scale globally. As I mentioned before, we have set up a global payment framework that allows us to work with localized payment providers in markets around the world. 

This stuff is not hard, just have to do things the proper way and have real chooms for your startup phase to make sure the company makes it and everybody wins. If you see where the future is going, business models like crypto exchanges can run themselves and pay for themselves if kept simple and do not do wayward nonsense like play with retail customers and their accounts like FTX did. It’s interesting to note everybody else ain’t got a clue about the opportunities, technology is all in their face but not even trying.