Business

Tradehill’s second attempt at making money off Bitcoin: Prime (exclusive)

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In its heyday, Tradehill was the second largest exchange for experimental virtual currency Bitcoin. But the site closed down due to a protracted regulatory dispute and a string of payments fraud charges.

With a new team and a design reboot, Tradehill is ready for a relaunch. The new site goes live today with a new business-focused product dubbed “Prime.”

“We want to be the grownups in the Bitcoin space,” said chief operating officer Ryan Singer in an interview. “Our goal is to be the institution that other institutions turn to when they have needs related to digital currencies.”

Bitcoin is a cryptographically secure currency that operates without a central authority, unlike the dollar or yen. It burst into the public eye in the spring of 2011, and its value has fluctuated widely ever since. Last week, the currency collapsed 23 percent due to a technical glitch.

Bitcoin is a favorite of the libertarian and hipster crowdCriminals too. The FBI fears the anonymous payment network is a haven for money laundering and other criminal activity.

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Above: Tradehill founders Ryan Singer and Jered Kenner (L-R)

However, Tradehill’s founders are convinced their first product will be a hit with business and accredited investors who need a better way to engage with the digital economy. Every client will receive a $75 credit to test trading and can activate an account with a deposit of at least $10,000, 200 Bitcoins, or $5,000 in Mt. Gox codes.

The difficulty in managing online transactions and exchanging digital wealth for hard cash led to the rise of exchanges like Tradehill, which use online wallet services to move real money around. Money transfers are regulated and require licenses.

Tradehill claims to be the first institution in the Bitcoin market to hold over $5 million in user funds and process full payouts. “Every other Bitcoin company that achieved scale either lost money in a hack or went insolvent,” a press release states.

Still, the Bitcoin currency has a few advantages — namely, it allows for complete anonymity and privacy. Once a transaction is completed, there is no central server with information that a government agency could subpoena. In addition, Bitcoin advocates will tell you that about 60 countries are blocked completely from PayPal, so sites like WordPress will accept Bitcoins for blog upgrades.

The team is confident it can deal with any potential problems that may arise.

“We have more lawyers than engineers,” said Singer, who stressed that the new Tradehill will be fully compliant. Likewise, the site’s defenses are up. To avoid being hacked, the founders recruited a chief technology officer from Google’s privacy unit.

It has been just over a year since Tradehill went bankrupt. In February 2012, founder Jered Kenna shut down the site after losing $100,000 in a dispute with one of its payment processors.

Singer said the company made the decision to keep the Tradehill name as it’s an “established brand” with a strong network, and the team refunded its investors when the site shut down. The founders also say they have strong relationships with other Bitcoin sites and services (and potential competitors) Mt. Gox, Coinbase, BitInstant, and BitPay.

The new team, based in San Francisco, has raised a small seed round of funding from angel investors and expects to close a first round of about $300,000 in the coming months.


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