Lykke Review – Is it scam or safe?

Lykke Review – Is it scam or safe? explained by professional Forex trading experts the “ForexSQ” FX trading team

Lykke Review – Is it scam or safe?

Lykke is an interesting project. It is a company which aims to provide crypto currency trading, alongside a forex brokerage and a platform which allows start-ups to issue new tokens. We will mostly focus on the first two aspects in this review. While the subject of trading Bitcoin at an exchange vs at a forex broker is an interesting one, which we have discussed, Lykke features both.

The company behind Lykke, is based in Switzerland and has two subsidiaries. One of them is registered in the United Kingdom and is currently in the process of applying for an FCA license, as an MTF (Multilateral Trading Facility). The third one is registered in Vanuatu and has the substantially easier to get Vanuatu Financial Services License.

This is a prime example which illustrates the point we often make, when comparing off-shore brokers to well regulated ones. The same company has already received the VFSC license, but is still in the application process with the FCA.

The UK’s Financial Services Authority is one of the most highly reputable financial watchdogs. Other than requiring a lot of documentation and at least € 730,000 in capital, there are two other major rules. First of all, forex brokers must keep their client’s funds in the so called segregated accounts. This rule implies a company can not freely access (and potentially “borrow”) traders’ capital. The second key ruling is the mandatory participation in the Financial Services Compensation Scheme (FSCS). This is a mechanism, which guarantees client funds, against broker bankruptcy. If you trade with and FCA-regulated forex broker, like IG, your account will be covered up to £50,000.

The fouder and CEO of Lykke is Richard Olsen, one of the co-founders of Oanda, a top-rated, US-based forex industry pioneer. This immediately raises the credibility of the company, as his expertise will definitely come in handy. That being said, Lykke is not related to Oanda by any means.

When opening the Lykke app, the first thing you see is the “Wallets” menu. You can have a lot of different currencies in your account, as illustrated by the screenshot. You can deposit USD, EUR, GBP or CHF to your account. Additionally Bitcoin and Ethereum transfers are available. You can freely transfer your funds from one currency to another.

Margin trading

While you can exchange currencies for one another, for the purposes of your wallet, this is only done without leverage. If you want to speculate, the company offers margin trading on several instruments, which include major currency pairs and BTC/USD. We will get to the trading conditions and platform later on in this review.

Buy equity in the company itself
The LKK coin is an asset which is available for trading on the platform. In essence, it is neither a stock nor a crypto currency. It’s mix of both, a digital token, with no mining nor blockchain involved. The LKK token is equity in Lykke itself. At the time of writing, 100 LKK represents one share in the company. The coins were initially offered in the second half of 2016 to early adopters and are now being traded on Lykke. Forward contracts with a one year delivery are also available, but these are a much more complicated instrument, which we do not recommend trading unless you have experience with similar ones.

Issue your own tokens or trade others’
The technology used to create the LKK token (the so called “colored coins”) can be used to create new tokens. We will not get into details, but in essence, if you have an idea for a new project, you can use Lykke as a platform for raising capital. You can create a token, similarly to how you would issue stocks, had your project been an established company. You could also invest in other people’s tokens (which have been approved by Lykke).

Lykke Review – Is it scam or safe? Conclusion

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