How MirrorX Prevents Mismanagement of Institutional Funds
Many of the largest financial fraud cases in history have stemmed from a lack of transparency in delegated funds and their inherent mismanagement. This ongoing challenge is one that financial institutions worldwide strive to address. As a crypto custodian, we witness this firsthand and craft bespoke solutions daily—some of which are unique one-offs, while others become recurring solutions to meet our clients' needs.
Ceffu’s Solution For Secured Fund Delegation
Mirror AB is a prime example of such a solution. It is a feature of our flagship off-exchange settlement product, MirrorX, which enables our institutional clients to delegate their asset balances from their Ceffu Prime Wallet (Entity A) to a third party’s Binance sub-account (Entity B).
The value proposition of Mirror AB is clear: enabling a secured, enterprise-grade solution for institutional fund delegations with the following benefits:
Transparency
When delegating funds through Mirror AB, Entity A maintains continuous visibility over transactions and the status of their assets on the third-party sub-account, as funds are instantaneously mirrored 1:1 from their Ceffu accounts.
Elimination of fund mismanagement
All Binance sub-accounts binded through Mirror AB are restricted from the withdrawal function. This restriction ensures that Entity B cannot withdraw or mismanage funds without the fund delegator's notice. Additionally, funds delegated to Binance sub-accounts never leave the custody of Ceffu, eliminating counterparty risks and providing the delegator with the utmost peace of mind.
The diagram below depicts a fund manager who stores their assets under Ceffu custody and decides to delegate assets from their Prime Wallet to a third party trading desk’s Binance sub-account for trade execution.
The relationship between Ceffu account owners (Entity A) and Binance sub-account owners (Entity B) is unique and can vary on a case-by-case basis. For instance, Entity A could also be a liquidity provider delegating to a third-party fund manager (Entity B).
In the case that Entity A and Entity B are entirely independent, a side letter issued by Ceffu will be necessary to bind the Ceffu and the Binance sub-account together. This side letter will address specific details not covered in the principal MirrorX binding agreement, providing additional clarity and ensuring that the obligations between entity A and B are clearly defined.
A MirrorX Powered Use Case
The Mirror AB solution is powered by MirrorX, our off-exchange settlement solution that provides institutional clients with a direct link to Binance, the world’s largest cryptocurrency exchange.
Through MirrorX, institutions can allocate a portion of their asset balance from their Prime Wallet and instantly delegate it to their designated Binance sub-account, maintaining a 1:1 balance. The delegated assets remain securely in Ceffu’s custody at all times, with transactions automatically settled off-chain on a T+1 basis.
The assets in the Binance sub-account can access a wide range of products and services on the exchange, enabling our institutional clients to implement various use cases and strategies while mitigating counterparty risks.
Deep liquidity without compromising on security
To learn more about how Ceffu’s custody and liquidity solutions can help drive your business forward, contact us using our institutional form.
–
About Ceffu
Ceffu is a compliant, institutional-grade custody platform offering custody and liquidity solutions that are ISO 27001 & 27701 certified and SOC Type 1 & Type 2 attested. Its multi-party computation (MPC) technology, combined with a customizable multi-approval scheme, provides bespoke solutions allowing institutional clients to safely store and manage their digital assets.
Institutions may also benefit from Ceffu’s secure gateway to a wide range of liquidity products within the Binance ecosystem. This can be achieved through MirrorX, our off-exchange settlement solution, provided in partnership with Binance.
Media contact: pr@ceffu.com
Stay informed
LinkedIn: Ceffu
X/Twitter: @CeffuGlobal