Statement on Flourish
Note: This article discusses ongoing events. Last updated March 2, 2023.
By: Max Lane, CEO
Yesterday, one of Paxos Trust Company's banking partners, Silvergate Bank, announced that it would delay the filing of its annual report.1 Paxos, the custodian for Flourish Crypto,2 currently has no material exposure to Silvergate and is actively moving key banking operations to other bank partners. There is no impact on Flourish Crypto holdings.
We want to reiterate that Flourish Crypto operations are unaffected by this news and that client assets are safe. As always, Flourish Cash3 funds are held separately from Flourish Crypto. The Flourish Crypto business has no impact on the Flourish Cash business.
We remain in close contact with Paxos and are actively monitoring events. The security of your assets remains our top priority.
Please reach out to your Flourish representative or email firstname.lastname@example.org to if you would like to discuss this further.
February 14, 2023
In light of the recent news that the custodian for Flourish Crypto, Paxos Trust Company, has been the subject of regulatory activity by the New York Department of Financial Services4 and the SEC,5 we want to update our Flourish Crypto advisors who may be concerned about the status of their client accounts with Flourish Crypto.
As described in the security statement below, we would like to reaffirm that:
- Flourish Crypto operations are unaffected by these notices and client assets are safe.
- Paxos holds all client assets bankruptcy-remote.
- Paxos does not rehypothecate client assets.
- Both NYDFS and the SEC have focused exclusively on Paxos’ BUSD stablecoin product, which does not impact Flourish Crypto’s business.
- Clients can access their Flourish Crypto accounts and purchase, sell, and hold bitcoin and Ethereum.
- The Flourish Crypto business has no impact on the Flourish Cash business.
- Funds in Flourish Cash are held separately from Flourish Crypto. Flourish Cash client funds are held exclusively in FDIC-insured accounts at Program Banks6 through Flourish Financial LLC, an SEC and FINRA-regulated broker-dealer.
December 9, 2022
In response to recent turmoil in crypto markets, we wanted to provide an update to our Flourish Crypto customers.
Flourish Crypto’s Custodian Has Not Been Impacted
All custody and execution services for Flourish Crypto are provided by Paxos Trust Company, LLC (“Paxos”), a New York Department of Financial Services Trust Company. While events are still unfolding, we can assure our customers that Paxos — and, by extension, Flourish Crypto — has not been impacted by the events of the past few weeks.
The collapse of FTX and Alameda is a stark reminder to all of us in the wealth management industry of the importance of custody when it comes to safeguarding clients’ hard-earned assets. These events reinforce our position that regulation and oversight matter, and Paxos’ commitment to the highest standards is what fueled our partnership with them as a custodian for Flourish Crypto. We’ve been in close contact with Paxos over the past few weeks to ensure the security and compliance of their system and safety of your assets.
Paxos’ Regulatory Status Protects Customer AssetsPaxos released a full statement, which you can read here. To highlight a few key points:
- Paxos is one of the most highly-regulated companies in the space. Paxos Trust Company, the entity that provides custody and execution for Flourish Crypto, was the first company to secure a New York Department of Financial Services trust charter back in 2015.
- Paxos Trust Company is legally required to fully segregate customer assets in bankruptcy remote accounts. Funds are liquid and always available upon request, fully backed by customer deposits. This legal protection is a foundational aspect of the offering, different from almost all others in the marketplace operating through money transmission licenses or no oversight at all. Paxos’ regulators ensure this through prudential regulations and regular exams.
- In the unlikely event that a Paxos regulated entity becomes insolvent, New York law clearly dictates how customers’ assets will be promptly returned to them. This is a critical distinction of Paxos.
- Paxos does not engage in any leveraged activity, lend off-platform, engage in market-making business, or speculate.
- Paxos is cash flow positive and has a strong balance sheet with many years of runway to navigate any market turmoil.
At Flourish, our mission is to provide innovative access to financial products to help RIAs secure their clients’ financial lives. We aim to arm our RIA partners with better tools in order to serve as fiduciaries on clients’ entire range of assets — not just their stocks and bonds. To fulfill that vision, we set out to build products that are secure, compliant, and “just work.”
We obsess over every detail of our products and maintain robust risk management practices to ensure that your clients’ data and assets are safe and secure.
Flourish maintains a strong culture of compliance. Like the independent RIAs we serve, Flourish is a heavily-regulated company that understands the importance of regulatory compliance when it comes to safeguarding client assets.
“Just Works” Ethos
We believe that delightful product experiences are part of the foundation of trust. We aim to build products that are beautiful, easy-to-use, integrated, and provide true value for our clients. While building these products is complex and arduous, we want our clients to feel like Flourish products “just work.”
We understand the years of work it took your clients to build their wealth, which is why safeguarding their assets will always be our top priority. Building secure, compliant products that “just work” is how we achieve this aim.
In the face of record inflation and the collapse of FTX and Alameda, we believe that it is an important moment for advisors to speak with clients about all their financial holdings, understand where all of their assets are held, and decide if a change is warranted. We at Flourish will continue to do our part to build new innovative products and improve our existing ones to help advisors secure their clients’ entire financial lives.
Please reach out to your Flourish representative or email email@example.com to discuss any questions.
Flourish builds technology that empowers financial advisors, improves financial lives and retirement outcomes, and delivers new and innovative investment options to advisors. Today, the Flourish platform is used by more than 440 wealth management firms representing more than $1.4 trillion in assets under management. Flourish is wholly-owned by MassMutual. For more information, visit www.flourish.com.