LedgerX cofounders placed on leave, replaced by 30-year Wall Street veteran

Exchanges • December 9, 2019, 2:57PM EST

UPDATED: December 9, 2019, 4:49PM EST

Quick Take

The cofounders of derivatives bitcoin exchange LedgerX have been put on leave
The announcement comes months after its botched bitcoin futures launch

Bitcoin derivatives platform LedgerX announced today that both of its co-founders Paul and Juthica Chou have been placed on administrative leave.

Paul Chou was the firm's CEO while Juthica Chou was the president and chief risk officer, per their LinkedIn profiles. They are also husband and wife. As a temporary replacement, Larry E. Thompson will act as interim CEO and lead director of Ledger Holdings. A Wall Street veteran, Thompson was the former vice-chair of the Depository Trust & Clearing Corporation (DTCC). LedgerX offers bitcoin options contracts to both retail and institutional investors.

LedgerX made headlines in August after the announcement of a new physically-delivered futures product soured.

After announcing the new product, a source told The Block the firm hit a snag with the Commodities Futures Trading Commission. Indeed, the firm never secured the proper licensing to offer futures to retail clientele, the agency later confirmed to The Block. A day after the original announcement, LedgerX pulled back on the announcement, which included the launch of a new retail platform Omni. Previously, LedgerX strictly catered to institutional investors.

Sources close to Chou told The Block at the time that he was under the impression that the agency was playing favorites, paving an easier path for its better-connected rivals, such as Bakkt and ErisX.

Indeed, the former Goldman Sachs trader threatened to sue the regulator following the botched launch.

"Also breaking, i've decided to sue the CFTC for anti competitive behavior, breach of duty, going against the regs, etc.," one tweet noted.

Since August, Bakkt has launched its market for physically-delivered futures. On Monday, it launched a cash-settled contract on ICE Singapore as well as an option tied to its bitcoin future.

Bitcoin Minis

On December 2, LedgerX quietly said it would convert the options contracts trading on its platform into new "Bitcoin Mini" contracts.

"LedgerX will be migrating all existing contracts to Bitcoin Mini Contracts," the firm said. "All existing positions will reflect this migration to Bitcoin Mini contracts."

The Block has reached out to the CFTC to see if the agency gave permission for the conversion.

About Authors

Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].

Celia joined The Block as a reporter after earning her BA in the History of Science from the University of Chicago. Having spent years pondering over why 2+2 cannot equal 5, she is interested in the history and philosophy of mathematics, computation, and cryptography. She also had a very brief stint at Crunchbase News.