Karpeles’ New Exchange, EllipX, Set for Launch in Europe

EllipX is expected to launch in Europe this month, with Poland serving as its operational base. Karpeles, who will oversee the technical aspects of the exchange as Chief Technology Officer, emphasized that the platform aims to be fully compliant with the Markets in Crypto-Assets (MiCA) regulation, which provides a comprehensive regulatory framework for the European crypto market. Karpeles' return to Poland, where Mt. Gox was once based, highlights his familiarity with the country and its regulatory environment.

Transparency as the Core of EllipX’s Mission

Karpeles has placed a strong emphasis on transparency for his new venture. He explained that many of the top crypto exchanges lack clarity about the companies running them, particularly those that aren’t household names like Binance or Coinbase. To address this issue, EllipX will adopt a structure similar to that of the New York Stock Exchange but tailored for crypto, ensuring that different functions such as brokerage, storage, and trading are compartmentalized.

“We’re creating an exchange where the trading entity is separate from brokers and custodians,” Karpeles said, describing a model where independent companies like BitGo handle the storage and clearing of crypto assets, while brokers provide localized services to users. This structure will enable greater transparency, with all entities subject to third-party audits.

Karpeles’ push for transparency comes in response to the collapse of FTX, which eroded trust in the crypto industry due to a lack of transparency around its internal operations. EllipX intends to share technical data with users, providing a clear view of how the platform operates and setting a new benchmark for transparency in the industry.

A User-Friendly Experience with the EllipX Wallet

In addition to its transparency focus, EllipX aims to be highly user-friendly. Last month, the platform introduced the EllipX Wallet, which uses multi-party computation (MPC) technology to streamline the user experience. Unlike traditional crypto wallets that require users to manage seed phrases, the EllipX Wallet eliminates the need for written backups, making it easier and more secure for newcomers to the space.

Karpeles sees user-friendliness as a key differentiator in a crowded market, where exchanges often prioritize advanced features at the expense of accessibility. With EllipX, Karpeles hopes to appeal to both crypto veterans and newcomers by offering a platform that balances security, transparency, and ease of use.

Lessons from Mt. Gox: Karpeles’ Focus on Security and Transparency

The collapse of Mt. Gox in 2014 remains one of the largest security breaches in crypto history, with over 850,000 BTC lost due to a hack. Reflecting on this, Karpeles has spent the past decade working closely with creditors and a trustee to repay funds to Mt. Gox users. He credits this experience for shaping his approach to EllipX, particularly his commitment to transparency.

“After what happened at Mt. Gox, transparency became something I felt needed to be an industry standard,” Karpeles said. He believes that the improvements in blockchain security and regulations since Mt. Gox’s bankruptcy would have prevented the hack if they had been in place at the time. Karpeles is hopeful that EllipX can help rebuild trust in the crypto space by leading the way in transparent business practices.

Ungox: A New Rating System for Crypto Projects

In addition to launching EllipX, Karpeles is also working on Ungox, a non-profit organization that will provide a rating system for crypto projects and exchanges. The goal of Ungox is to offer crypto investors a reliable resource for evaluating the credibility of different platforms. Given the recent scandals in the crypto industry, such as the downfall of FTX, the need for transparency and accountability has become more critical than ever.

Ungox aims to fill this gap by offering unbiased ratings based on third-party audits and comprehensive data analysis. By providing these ratings, Karpeles hopes to empower investors and improve the overall health of the crypto ecosystem.

Mt. Gox Afterthoughts

Despite the notorious collapse of Mt. Gox, Karpeles has managed to maintain a presence in the crypto world. In a recent post on X (formerly Twitter), he announced that all Mt. Gox customers from 2010 to 2014 are eligible to receive a special Mt. Gox NFT, which will offer discounts on trading fees at EllipX. This move is part of his effort to reconcile with former users and provide them with benefits on his new platform.

Karpeles also acknowledged that while the Mt. Gox collapse was a devastating event, many former users have seen significant gains due to Bitcoin’s price increase since 2014. "Some are actually quite happy because it's been ten years," Karpeles noted, highlighting the irony that despite the initial losses, many Mt. Gox creditors stand to profit significantly from the eventual payout.