From FT Alphaville:
What exactly is Transferwise?
For a company that prides itself on transparent fee structures, Transferwise — the UK-based FX money transmitting unicorn — has a fairly opaque way of delivering attractive exchange rates.*Here's an audacious one from The Guardian and the New York Daily News' "Con artists sentenced to jail after $10 million Monopoly money scam in England":
Competitors who have tried to reverse engineer TW’s rates have struggled, not least because pure brokerage models are not supposed to take principal trading risk when they aren’t able to immediately match buyers and sellers in the market.
To the contrary, they pass orders onto the wholesale interbank market through properly licensed institutions who take on the risk of supply/demand imbalances in their place. But this, alas, means brokers have to factor in the cost of wholesale liquidity, which inadvertently puts a floor on how low their own customer fees can go (at least if they plan to break-even).
So on the one hand, brokers who don’t take risk on to their balance sheets have to pay to access wholesale markets. And on the other hand, FX operators who do take principal risk generally charge a premium to cover the risk of warehousing imbalances on their own balance sheet.
Transferwise CEO Taavet Hinrikus freely admits the company is highly dependent on third party liquidity. Some cross-rates the company offers aren’t matched on their own platform at all, thus are 100 per cent dependent on interbank liquidity.
In the past Hinrikus has declined to divulge the exact ratios the company matches directly, but he did tell Bloomberg’s Jeremy Kahn earlier this month that at least 60 percent of its transaction volume on 20 “routes” among Europe, the U.S., the U.K., and Australia does get offset in this way....MORE
Go directly to jail. Do not pass Go. Do not collect $200.Not saying that Transferwise is doing anything illegal. just that when they can't explain how they do that voodoo that they do so well it flies a ruby (so to speak) banner at ya.
A group of con artists were sentenced to jail Monday after scamming jewelry dealers in England out of almost $10 million.
Gianni Accamo, 44, Dusica Nikolic, 45, Dragoslav Djordjevic, 44, Juliano Nikolic, 26, and Bruno Nikolic, 27, were sentenced after ripping off English dealers by hiding stacks of Monopoly money inside real euro notes, according to The Guardian.
In the heist, the group swindled London jeweler John Calleija — whose clients include Zara Phillips and Colin Firth — out of more than $8.5 million.
Accamo posed as a gem expert and met Calleija in a Covent Garden hotel to inspect the precious stones.
After agreeing on a price, Calleija used a cash-counting machine to verify the total, the Guardian reported.
After he was convinced, Accamo and his crew switched the real euros for Monopoly money, then picked up the jewels at the store.
Calleija said he didn’t realize he’d been scammed until the thieves were long gone.
“You can imagine the horror when he goes to check the cash. It is immediately apparent it is not the same that he had counted in the hotel. It’s counterfeit,” prosecutor David Hughes said in court....MORE
