DX.Exchange — Tokenized Stocks, A security token or a fraud?

Jack YS Park
4 min readJan 9, 2019


DX Exchange (DXE), an Estonia-based exchange offering a tokenized NASDAQ stocks, went live on January 7th, 2019. Since the news of its launch broke in May 2018, the exchange has drawn insane interest from international investors with little marketing efforts.

Currently, DX Exchange is said to be regulated under European Unions’ MiFID II and its partner, MPS (Market Place Securities, Ltd.) is licensed under CySEC.

How does DX.Exchange work?

On the website, the exchange stated the exchange buys NASDAQ stocks as requested by its users then create an ERC-20 token backed by one share of real stock, which is collectively held in the segregated account.

Here is how this process works in detail:

MPS Market Place Securities, LTD (based in Cyprus):

  • Purchase stocks from traditional exchanges (ex. NASDAQ, SEHK)
  • Hold the acquired stocks and issues ERC20 tokens backed by the real-world stocks (1:1 Ratio)


  • Tokenized stocks are listed on the exchange and are offered to trade
  • Partnered with MPS to offer MPS’s stock-backed tokens

Many of you may believe that stocks traded in DX Exchange are considered a security token. However, these tokenized stocks are NOT a security token.
Even if these tokenized stocks are a security token, DX.exchange doesn’t have any broker dealer license for trading securities such as U.S. stocks or it’s derivatives.

Fact Check — DX.Exchange

  1. Tokenized stocks represent the ownership of the real-world stock?
Source: DX.Exchange White paper
  • Tokenized stocks in DX Exchange hold a similar form as Crypto Depository Receipts (CDR). Yet, despite being backed 1:1 by the real-world stocks, they do not represent the real-world stocks and are not entitled to any power that stocks offer. Users in DX Exchange are NOT purchasing the ownership of the company’s stock, instead the ownership of a token issued by MPS.

2. NASDAQ-backed?

  • DX Exchange markets themselves as a NASDAQ backed exchange as if they have made a direct agreement with NASDAQ. However, DX Exchange only uses NASDAQ’s Exchange Matching Engine that is used in over 70 markets already. Beyond this, they do not have any further connection with NASDAQ.

3. Regulated under MiFID II license?

  • DX Exchange also claims they’re under MiFID II license. DXE has two regional licenses which comply to the MiFID II directive. But it’s not THE license itself.

4. (Updated) Marketing in prohibited jurisdiction — South Korea

Source: DX.Exchange White paper

As mentioned in the DX Exchange whitepaper, South Korean residents “are not permitted to purchase tokens”. The whitepaper states that the company is NOT responsible for any loss incurred from investments from the above-mentioned countries. However, DX Exchange has an active DX Exchange telegram community in Korean and provides necessary support to use the exchange.

Official Korean DX.Exchange Community — Link

SpotOption, the Company behind DX.Exchange?

Source: CySEC

Again, MPS Marketplace Securities is licensed under CySEC (Cyprus Securities and Commissions) and is said to provide services such as “Execution of Orders on Behalf of Clients”. MPS was previously named as SpotOption Exchange LTD.

About SpotOption

SpotOption was a privately held platform software provider based in Israel in the controversial binary option industry, which was banned in Israel starting in January 2018.[3][4] The firm announced that it has left the binary options business and is exploring other possibilities.[5]Wikipedia

After its controversy regarding binary options exchange in 2017, SpotOption’s platform was shut down by FBI in early 2018 after SpotOption’s CEO was arrested in September 2017.

On top of that, CySEC issued €10,000 administrative fine to SpotOption Exchange, specifically, in 2016.

MPS Marketplace Securities Ltd. is operating under same license number as SpotOption Exchange and they should not be trusted.


Despite the great idea of tokenized stocks, many questions have arisen regarding the exchange and the way it operates.

No one except you can take responsibility for your investing decisions, so do think it through before investing. Thank you for reading!

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