In this review of Pionex we reveal problems that we encountered when researching about this cryptocurrency platform.
What is Pionex
Pionex is a cryptocurrency trading platform. It is an exchange that will let you trade crypto tokens on your own or you can use the in-built robots and set them up to trade for you.
There is also a special investment instrument called Dual Investment that makes speculation simple and shows very juicy returns in the hundreds of percent per year.
Pionex proudly says that it has a FinCEN license in the United States, which is supposed to make it trustworthy. But is it, is Pionex a legit cryptocurrency exchange?
The issues with Pionex
When researching about Pionex we found some issues that maybe are not red flags per se, but they are things that made us rise our eyebrows. These are the issues we have with Pionex.
FinCEN license fiction
On its blog, Pionex claims that it has been “granted” the U.S. FinCEN’s MSB license and that it is the first cryptocurrency exchange with in-built trading bots with this license.
This suggests that Pionex had to go through some kind of scrutiny by the FinCEN and was granted the MSB license only after the FinCEN concluded that it is a reliable exchange. That’s the impression the Pionex post gives.
But the reality is a little bit different. FinCEN is not a regulator of investment services, it does not examine what the exchange offers to its clients, whether it has robots etc.
In fact, as an company you just submit your information to the FinCEN, they register you in their public database and that’s it.
FinCEN explains this process on its website. But to be sure that Pionex did not receive a special treatment in terms of scrutiny, we asked the FinCEN about Pionex.
In the picture below you can see the response we received. It is a confirmation that the FinCEN register contains only information provided by Pionex and that the FinCEN does not verify that information in any way.
So when Pionex is saying that it was “granted” a license from the FinCEN, it is an overstatement, because it did not have to go through any scrutiny at all, it just submitted some information to a database and that was it.
Structured Dual Investment – No proper risk disclosure
Another issue we have with Pionex concerns the investment product called Dual Investment. The exchange shows huge returns for this investment instrument, in some cases more than 400% APR.
Pionex also says that the only risk and uncertainty with Dual Investments is the currency of settlement while adding that the profits come from return swaps without explaining that they actually are.
So a less experience user can get the impression that a Dual Investment is a sure profit with a high return.
But when you carefully examine the settlement calculator, you will realize that the product can make you lose money if the price moves significantly in the wrong direction.
We believe that Pionex should do a better job in explaining this product and most importantly the risks associated with it.
Also, Dual Investments might be considered as derivatives that are subject to regulation. We asked Pionex for an explanation about how exactly the product works but they were unable to provide that explanation.
So we don’t know the technicalities to reach a conclusion, but we lean towards it being a derivative that the exchange would need a license for.
Speaking of irresponsible things, let’s talk about Pionex robots. The striking fact is that there is a Martingale robot that you can use.
Because we have never seen a successful trader/investor who would agree that any form of Martingale is a responsible thing to use in trading. It always is only a matter of time before a sequence of price movements in one direction wipes out your entire account when you are trading Martingale.
We believe that Martingale should not be in the arsenal of any responsible trader, so it is a big surprise that Pionex has it in its toolbox.
Our research also led us to the Pionex SEC registration. Pionex Investments is a different company than Pionex PTE Ltd. that seemingly runs the exchange and is registered with the SEC as an investment adviser.
In its brochure Pionex Investments explains that it develops trading robots, it describes for example the grid and Martingale bots.
The brochure mentions that the company can be reached at a pionex.com support e-mail address, so what a surprise that it also says that Pionex Investments does not have any retail clients.
This is a curious thing, why is there this separate Pionex Investments company from New Jersey developing the robots and using the [email protected] address but denying to have retail clients, therefore saying it is not running the pionex.com exchange?
Who runs the show?
The last question we wanted to find the answer to is who actually runs the Pionex exchange. On its official website we could not find that information.
FinCEN’s website reveals that the MSB registration belongs to Pionex PTE Ltd. from Singapore. There indeed is a Pionex PTE Ltd. company registered in Singapore, however there is a problem with its address.
Pionex registered with the FinCEN is supposed to be located on Paya Lebar Road, while the Pionex company registered in Singapore is located on Chulia Street. We checked the map and these are two completely different locations. Which raises a question mark. Are these the same company?
Also, according to the Singapore’s companies register, the previous name of Pionex was Bituniverse PTE Ltd. Today Bituniverse (bituniverse.org) is an obvious scam with crypto robots with a supposed 100% average APR and fake testimonials.
Bituniverse was in the past available on Pionex, so there seems to be a relation between the two.
Besides there is this Pionex Investments company from New Jersey that develops robots used by the Pionex exchange. To add to the confusion, there is also Pionex Inc. registered in Delaware and Pionex Limited registered in Colorado.
All in all it is confusing and not clear who truly runs the Pionex cryptocurrency exchange.
Pionex review – Conclusion
The issues we have with Pionex concern how it overstates the FinCEN registration, how it understates the risks associated with its products and the fact that there is an unclear structure of companies behind the exchange.