XREX Secures $17M Funding for Faster Cross-Border Trade

XREX Secures $17 Million to Expedite Cross-Border Trade

A significant amount of global trade relies on the United States dollar, which presents challenges for businesses operating in regions experiencing dollar scarcity. XREX, a blockchain-based startup, was established to facilitate quicker transactions for cross-border businesses in developing markets. It offers solutions such as a payment escrow service and a crypto-fiat exchange platform.

Funding Details and Investors

The Taipei-based company recently announced a $17 million pre-Series A funding round, spearheaded by CDIB Capital Group. This oversubscribed investment also saw contributions from SBI Investment, Global Founders Capital, ThreeD Capital, E.Sun Venture Capital, Systex Corporation, MetaPlanet Holdings, AppWorks, BlackMarble, New Economy Ventures, and Seraph Group.

XREX previously secured $7 million in seed funding back in 2019.

Strategic Use of Funds

A portion of this new capital will be allocated towards obtaining financial licenses in key markets including Singapore, Hong Kong, and South Africa. The company also intends to forge partnerships with banks and financial institutions, including payment gateways.

“Our aim was to cultivate a cap table that is attractive to regulators,” explained Wayne Huang, co-founder and CEO of XREX, in an interview with TechCrunch. “Securing investment from banks and public companies can be difficult for startups, but we successfully achieved this in this round.”

Founder's Background and Inspiration

Wayne Huang previously founded Armorize Technologies, an anti-malware SaaS company, which was acquired by Proofpoint in 2013. His experiences while serving clients in Bangalore and Chennai exposed him to the difficulties of international money transfers.

“We encountered numerous obstacles related to cross-border money transfers, which seemed insurmountable,” Huang stated. “Having grown up in both the U.S. and Taiwan, we weren’t initially aware of these issues. The publication of the bitcoin white paper by Satoshi Nakamoto then sparked further exploration.”

The Genesis of XREX

Huang began to consider how blockchain technology could promote financial inclusion in emerging economies, particularly India. This concept materialized when he collaborated with Winston Hsiao, the co-founder of XREX and the founder of BTCEx-TW, one of Taiwan’s earliest bitcoin exchanges. Hsiao, having experience exporting semiconductors and electronics from Taiwan, was also well-versed in the complexities of international trade.

XREX’s Core Services

XREX Crypto Services provide merchants, especially those in areas with limited access to U.S. dollars, with the tools necessary to conduct trade using digital fiat currencies. Huang emphasized, “They require swift access to U.S. dollars to secure essential commodities for import, and that’s the core problem we address.”

Merchants and their customers utilize XREX’s wallet, which incorporates a commercial escrow service known as Bitcheck. Huang described Bitcheck as functioning similarly to a standby letter of credit from a traditional bank, assuring buyers of their ability to fulfill payments.

How Bitcheck and Crypto-Fiat Exchange Work

Bitcheck leverages digital currencies like USDT and USDC, stablecoins pegged to the U.S. dollar. Merchants transfer stablecoin to suppliers, and XREX holds the funds in escrow until the supplier provides proof of shipment, at which point the payment is released.

XREX’s crypto-fiat exchange enables users to convert USDT and USDC into U.S. dollars, which can then be withdrawn or deposited through the platform.

Focus on Stability and Compliance

The company plans to expand its fiat currency platform, but Huang indicated a limited addition of cryptocurrencies. “We are focused on businesses, and brand reputation and compliance are paramount to them. We will prioritize stablecoins endorsed by the U.S. Comptroller of the Currency.”

Security and Transparency Measures

XREX collaborates with compliance and anti-money-laundering (AML) providers such as CipherTrace, Sum&Substance, and TRISA. Funding will also be used to enhance security and compliance features, including mandatory Public Profiles for customers and a Reputation Index to promote transparency.

Investor Confidence

Ryan Kuo, head of CDIB Capital Innovation Fund, stated, “CDIB was an early investor in XREX. Following the company’s rapid revenue growth and dedication to compliance, we were committed to increasing our investment and leading this strategic round.”