XREX co-founders Winston Hsiao and Wayne Huang
A significant portion of world trade is conducted in US dollars, which creates problems for businesses in countries with dollar shortages. Blockchain startup XREX was launched to help cross-border businesses in emerging markets transact faster with products like a payment escrow service and a crypto-fiat exchange platform.
The Taipei-based company today announced that it has raised $ 17 million in pre-Series A financing led by CDIB Capital Group. The oversubscribed round also included participation from SBI Investment (a subsidiary of SBI Holdings), Global Founders Capital, ThreeD Capital, E. Sun Venture Capital, Systex Corporation, MetaPlanet Holdings, AppWorks, BlackMarble, New Economy Ventures and Seraph Group. XREX’s last funding was a funding round of $ 7 million in 2019.
Part of the new round will be used to apply for financial licenses in Singapore, Hong Kong and South Africa, and partner with banks and financial institutions, as payment gateways.
“We specifically wanted to create a regulatory-compliant capitalization table,” XREX co-founder and CEO Wayne Huang told TechCrunch. “It’s really hard for a startup like ours to raise funds from banks and public companies, but as you can see, we have deliberately done this in this cycle and we have been successful. “
Huang sold his previous startup, Armorize Technologies, an anti-malware SaaS developer, to Proofpoint in 2013. Armorize scanned the source code for vulnerabilities, and many of his clients were developers in Bangalore and Chennai, so Huang switched to a lot of time there.
“We have encountered all kinds of cross-border money transfer issues. It seemed almost unstoppable, ”Huang said. “Having grown up in the United States and then in Taiwan, we were not exposed to these problems. So it planted a seed, and then when Satoshi [Nakamoto] released the bitcoin white paper, of course that was a great thing for all cybersecurity experts.
He started to think about how blockchain can support financial inclusion in emerging markets like India. The idea came to fruition Huang teamed up with XREX co-founder Winston Hsiao, founder of BTCEx-TW, one of Taiwan’s first bitcoin exchanges. Hsiao grew up in India and founded Verico International, exporting Taiwan-made semiconductors and electronics to other countries. He was therefore also familiar with the problems of cross-border trade.
XREX crypto services provide traders, especially those in countries with low US dollar liquidity, tools to trade in digital fiat currencies. “They need to have quick access to the US dollar and be able to pay it off fast enough so that they can secure the important products that they want to import, and that’s the problem we want to solve,” said Huang.
To use the platform, traders and their customers sign up for XREX’s wallet, which includes a business escrow service called Bitcheck. Huang said it was similar to a stand-by letter of credit from a commercial bank because buyers can use it to guarantee that they will be able to make payments. Bitcheck uses digital currencies such as USDT and USDC, stablecoins indexed to the US dollar.
Merchants pay stablecoins to vendors, and XREX escrows funds until the vendor provides proof of shipment, in which case it transfers payment to them. XREX’s crypto-fiat exchange allows users to convert USDT and USDC to US dollars, which they can also withdraw and deposit through the platform.
Some of the funding from XREX will be used to expand its fiat currency platform, although Huang said he does not plan to add too many cryptocurrencies “because we are not designed for crypto traders. , we’re built for business and brand really matters to them. Brand and compliance, so whatever the US Comptroller says is good stablecoin is what they’re going to use.
Some of XREX’s partners include compliance and anti-money laundering providers such as CipherTrace, Sum & Substance, and TRISA. A portion of the funding from XREX will be used to extend its security and compliance features, including public profiles, which are mandatory for customers, and the User Reputation Index to increase transparency.
In a statement on funding, Ryan Kuo, director of the CDIB Capital Innovation Fund, said: “CDIB was an early investor in XREX. After witnessing the company’s rapid revenue growth and commitment to compliance, we were determined to double our investment and lead this strategic cycle.