Applicant information
Name: Dinari Inc.
Address (Headquarters): 400 Hamilton Ave, Suite 130
City, State, Postal Code: Palo Alto, CA 94301
Country: United States of America
Website: dinari.com
Primary contact Name: Brandon Ooi
Title: CPO
Country: United States of America
Email, Telegram, Forum, & other methods of contact
Email: booi@dinari.com
Telegram: t.me/booism
Forum: Profile - booi - Arbitrum
Key Information
Expected Yield: as for 4/23/2024 (after fees)
- USFR.d - 5.35% (dividend yield)
- SPY.d - 1.34% (dividend yield), 24.5% (growth LTM). Historical growth of 14% annually over the last 5 years.
Expected Maturity:
- USFR.d does not have a maturity and is a fund that continuously tracks the newly issued U.S. Treasury floating rate notes and 3-month treasury bills.
- SPY.d does not have a maturity and is a fund that tracks the S&P 500 index.
Underlying asset:
- USFR.d is 1:1 backed by shares of the WisdomTree Floating Rate Treasury ETF (ticker USFR) traded on the NYSE Arca. Underlying holdings of USFR are U.S. Treasury floating rate notes with an average reset frequency of 1 week and an average maturity of 1.42 years.
- SPY.d is 1:1 backed by shares of the SPDR S&P500 ETF (ticker SPY) traded on the NYSE Arca. Underlying holdings of SPY are shares of companies in the S&P 500.
Minimum/Maximum transaction size:
- $1 USD minimum, no maximum.
- USFR - Average daily traded volume: $194M USD.
- SPY - Average daily traded volume: $37.7B USD.
Current AUM for product:
- USFR.d - $115,000 USD
- SPY.d - $4,800 USD
Current AUM for issuer:
- USFR - $17.5B (WisdomTree)
- SPY - $505B (State Street Global Advisors)
Volume of transactions LTM:
- USFR.d - 4473.40
- SPY - 9.52
Source of first-loss capital:
Dinari offers tokenized security products that are backed 1:1 with the respective, underlying equity security or ETF. The source of first-loss capital is the equity position of that underlying asset; or the equity position of the token itself, as applicable.
Basics and background
1. How will this investment improve Arbitrum’s RWA ecosystem?
The driving idea behind the Arbitrum STEP is to support the growing RWA ecosystem and diversify the Arbitrum treasury into tokenized RWAs that offer stable, liquid and uncorrelated yield. For this, Dinari is offering two possible investments:
- USFR.d, a token based on the WisdomTree Floating Rate ETF (ticker USFR), a fund that invests in U.S. Floating Rate Notes. Even among the various available Dinari dShares, USFR.d offers a unique investment avenue that was purpose-built with price stability, liquidity and yield in mind.
- SPY.d, a token based on the SPDR S&P500 ETF (ticker SPY), a fund that invests in S&P 500 companies and tracks the S&P500 index.
Dinari dShares are a new type of decentralized security bringing tokenized access to the US stock market to the Arbitrum ecosystem. The public stock markets are perhaps the largest traditional RWA category in the world representing $50T USD of value in the US alone and over $110T USD globally. While these markets are large and efficient, traditional access to them, especially outside of the US, is still challenging.
It is Dinari’s overarching goal to democratize access to the traditional stock market and bring these assets on-chain. Dinari issues 1:1 backed security tokens (“dShares”) in the form of a standard, transferable and yield-bearing ERC-20s. dShares are guaranteed to be 100%-backed at all times with our fully-automated and audited mint and burn process.
Dinari has been an SEC-registered transfer agent since 2022 and issues dShares under SEC Regulation S to investors that undergo KYB/KYC.
Arbitrum’s RWA ecosystem is small but fast growing and Dinari is proud and excited to be a part of it.
2. Identify key management personnel and individual experience. Also include third parties utilized for managing assets and their qualifications.
3. Describe any previous work by the entity or its officers/key contributors similar to that requested. References are encouraged.
Gabriel Otte (CEO): Previously, Gabriel was a biotech founder of Freenome ($10B Biotech), a multi-billion dollar cancer diagnostic developer. He stepped back as CEO in 2021 as the company was preparing to IPO. He has been contemplating the ways in which we can globalize the stock exchange through the blockchain since 2016, working to formulate the idea with Balaji Srinivasan who was a friend building a biotech company next door to Freenome at the time. The establishment of the first version of RWAs (mainly stablecoins) and their high market cap makes Gabriel believe that this is finally the time that a global RWA exchange will take off. His previous dealings with regulators has proven valuable navigating the difficult regulatory challenges of Dinari. Gabriel holds a BA in Computational Biology and Chemistry from Cornell University and attended University of Pennsylvania School of Medicine for graduate studies before withdrawing to start Freenome.
Jake Timothy (CTO): Jake began his career at Northrop Grumman’s aerospace division, where he led the development of sophisticated data-driven systems. These systems were pivotal in enhancing operational coordination internally and for the warfighter, including significantly increasing production rates for fighter jets amounting to billions of dollars in orders. In the realm of cryptocurrency, Jake was an early adopter, trading Bitcoin in 2011. He re-entered the crypto space in 2017 creating advanced trading algorithms and developing smart contracts. His expertise in decentralized finance led to the creation of a smart contract-based equity protocol, laying the foundation for Dinari’s flagship product, the dShares tokenized stocks platform. Jake holds an MS in spacecraft navigation and control from the USC Viterbi School of Engineering.
Chas Rampenthal (CLO): From 2003 to 2021, Chas served LegalZoom in several roles. Initially, as General Counsel, he managed the Company’s legal functions, including corporate transactions, litigation, regulatory, intellectual property, government relations, employment, legal ethics, and compliance. During his last two years, Chas served as Segment Leader for the Attorney Asist Segment and as Head of Industry Relations. During his time at LegalZoom, Chas wrote a regular column for Inc. Magazine Online, and co-hosted Legally Bound – a live call-in Los Angeles talk radio program on KTLK and KABC. Chas is a member of the CA and MA bars. He earned his bachelor’s degree in economics and math studies summa cum laude from Southern Illinois University and his JD from the University of Southern California. Prior to his legal career, Chas served honorably in the United States Navy as an officer and naval aviator, where he flew multiple Outlaw Hunter combat missions in support of Operation Desert Storm.
Brandon Ooi (CPO): Previously, Brandon was co-founder and CTO of Crunchyroll ($1B+ exit to Sony) an anime streaming and distribution company. He was instrumental in growing the company from the original 4 people to over 200 managing many aspects of engineering, product and infrastructure. He is a seasoned engineer with leadership roles at a number of startups including HOTorNOT (acquired by AM), Rune (CTO), Sharespace (CTO, acquired by Stripe) and SambaTV (Director of Engineering). With expertise spanning from consumer technology to enterprise fintech/compliance and experience at Stripe (3 years, platform/marketplace experience), he has always had a special interest in building real web3 financial products backed by real world assets. Brandon holds a degree from the UC Berkeley College of Engineering EECS program with a minor in Bioengineering.
Garrett Wong (CFO): Garrett has held a number of finance leadership and investing roles, primarily in the technology industry. Previously, he was Chief Financial Officer at Teiko Bio. Prior, Garrett was at Shutterfly, where he led corporate development and investor relations and ran strategic finance for one of its business units. While at Shutterfly, Garrett led the company’s $225 million acquisition of Spoonflower and raised over $1 billion financing. Prior to Shutterfly, Garrett was a venture capital investor at Hewlett Packard Pathfinder, investing in and serving on the Boards of growth-stage tech startups. Earlier, Garrett worked in corporate development at Cisco Systems, helping it acquire enterprise tech companies, and he started his career in investment banking at UBS Investment Bank. Garrett holds an MBA from University of Pennsylvania (The Wharton School) and a BS in electrical engineering from University of California, Los Angeles.
4. Has your entity or its officers/key contributors been subject to an enforcement action, criminal action, or defaulted on legal or financial obligations? Please describe the circumstances if so.
No.
5. Describe any conflicts of interest for your entity and key personnel.
No conflicts of interest.
6. Insurance coverages, guarantees, and backstops Name of insurer or guarantor Per incident coverage Aggregate coverage
Dinari uses Alpaca Securities LLC for underlying brokerage services and securities custodianship. Alpaca Securities LLC is a FINRA registered broker-dealer and member of the Securities Investor Protection Corporation (“SIPC”). In the case of a brokerage failure, SIPC arranges the transfer or fair-market liquidation of securities and provides up to $500,000 in additional securities protection. In addition to that, Alpaca Securities LLC has purchased additional insurance through the LLoyd’s of London known as Excess SIPC Coverage in the event SIPC limits are reached. For more information please see Alpaca Support - Is my account insured? Is Alpaca legit?.
7. Historical tracking error in your proposed product, or similar to that being proposed Product 2024 YTD 2023 2022 2021
- USFR.d - The tracking error for USFR.d is 0.15% for all years 2021 to 2024.
- SPY.d - The tracking error for SPY.d is 0.0942% YTD for 2024 and averages 0.09% for all years 2021-2023.
8. Brief reason for above tracking error.
The underlying asset for USFR.d and SPY.d are ETFs. The primary tracking error for these types of assets is the Net Expense Ratio or fee charged by the ETF for management.
9. Please describe any experience your firm has in working with decentralized organizational structure
We actively work with AllianceDAO and SteelDAO and both are investors in Dinari. We have also previously received grants from the Arbitrum Foundation and are in active discussions with several DAOs to be a yield-bearing provider for their treasury management.
10. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?
Our current assets under management is approximately $437,000.
11. How many of these assets held are present on Arbitrum One, if any?
Approximately 98% of these assets are held on Arbitrum One.
Plan design
1. Please describe your proposed product, including a description of the underlying assets and, if more than one asset, the proposed allocation among assets and general investment guidelines. Where appropriate, include targeted maturity mix and credit quality. Attach supplementary documents as appropriate.
Dinari is proposing a customizable mix of USFR.d a US treasury-based dividend yield product and SPY.d a less stable but higher growth equities-based product.
Dinari dShare tokens are backed 1:1 with the underlying security, in this case WisdomTree Floating Rate Note ETF (USFR) and SPDR S&P 500 ETF (SPY), an equities-based product.
It’s currently expected for interest rates to remain high for the coming year making USFR.d an attractive investment. However, growth of SPY and the stock market at large has continued to outpace these high interest rates with a 5-year performance of >14% annually.
We have linked the WisdomTree Floating Rate ETF prospectus which outlines their investment guidelines, performance and credit quality of their underlying floating rate notes (AAA).
We have also linked the SPDR S&P 500 ETF prospectus which outlines the current mix of stocks, historical and expected performance.
https://www.ssga.com/us/en/intermediary/etfs/resources/doc-viewer#spy&prospectus
Do investors have any shareholder, investor, creditor or similar rights?
Investors in Dinari dShares are not granted full shareholder rights. dShare holders are entitled to dividend rights but not voting rights. dShare holders that undergo KYC and AML screening have rights to purchase dShares and redeem them at the current market price. They also have rights to information regarding the financial performance for the underlying asset.
1. Describe the legal and contractual structuring for your product including regulatory bodies overseeing your business and the product and identifying all legal jurisdictions interacting with your product. Attach supplementary documents as appropriate.
Dinari offers its asset-backed tokens pursuant to SEC Regulation S, a safe harbor from registration (17 C.F.R. 230.901-230.905). Our tokens are available in certain approved jurisdictions outside the United States. On a case by case basis, accredited investors in the United States may be allowed to purchase certain Dinari asset-backed tokens, provided that such sale is exempt from registration pursuant to an applicable exemption, such as Regulation D, or Rule 144A. Dinari complies with applicable Securities Exchange Commission regulations. It also uses reputable third parties to comply with KYC/KYB procedures as well as AML/CTF procedures for its customers. Underlying security assets are held in a Dinari account that is powered by Alpaca Securities, a FINRA registered Broker-Dealer. An updated list of jurisdictions where sale under SEC Regulation S is available in our documentation for reference: Unsupported Countries | dShares User Guide | Dinari Documentation
2. Would Arbitrum’s assets be bankruptcy remote from your own entity and its officers/key contributors? If so, please explain the legal and contractual basis. On a confidential, non-reliance basis, provide any third party legal opinions to support the conclusions.
Dinari is currently in the process of setting up a bankruptcy remote vehicle. Dinari Vault Inc. will be an independent but wholly-owned subsidiary of Dinari Holdings Inc and protected from creditors in the event of a bankruptcy. This is a high-priority feature and we expect imminent completion in Q2 2024.
How are Arbitrum’s assets protected vis-a-vis the bankruptcy of the brokerage or applicable financial institution (e.g., bank deposit insurance, securities insurance, etc.)?
Dinari uses Alpaca Securities LLC for underlying brokerage services and securities custodianship. Alpaca Securities LLC is a FINRA registered broker-dealer and member of the Securities Investor Protection Corporation (“SIPC”). In the case of a brokerage failure, SIPC arranges the transfer or fair-market liquidation of securities and provides up to $500,000 in additional securities protection. In addition to that, Alpaca Securities LLC has purchased additional insurance through the LLoyd’s of London known as Excess SIPC Coverage in the event SIPC limits are reached. For more information please see Alpaca Support - Is my account insured? Is Alpaca legit?.
Does the Issuer issue more than one asset? If so, what is the priority relationship between different asset classes?
Dinari issues over 40 different asset tokens representing a wide range of US securities from technology companies to commodities ETFs and beyond. USFR.d represents one of our most important asset classes and is the primary constituent of USD+, our yield-bearing stablecoin. It also acts as a “cash-sweep” investment for uninvested currency.
1. Provide a detailed cash flow diagram that shows the flow of funds from ARB/Fiat conversion, investment in underlying asset, payment of expenses, sale of underlying asset, and repayment (Fiat/ARB conversion), including the counterparties and legal jurisdictions involved.
2. Describe anticipated tax consequences (if any) in transacting on the underlying and/or receipt of yield.
Dinari unfortunately cannot provide legal, financial, or tax advice. Our users and investors should consult their tax advisors for any tax considerations.
Dividends
Yield for all underlying stock are distributed as dividends which are then subsequently distributed by Dinari to token holders in one of two ways:
- Holders of dShares like USFR.d and SPY.d are issued dividends in the form of USDC to the holding wallet.
- Holders of wrapped dShares like USFR.dw and SPY.dw are issued dividends in the form of reinvestment in the dShare which are reified upon unwrapping.
Note: Wrapping of dShares from their SYMB.d to SYMB.dw is necessary for compatibility and composability with DeFi. Wrapped dShares are able to account for changes to the underlying stock such as stock splits/reverse splits and continue to provide yield even when staked or otherwise used in DeFi protocols. You are able to wrap and unwrap dShares at sbt.dinari.com.
USFR.d
The USFR.d token issuance and redemption price is determined by the underlying USFR ETF price on the stock market. This price is typically very stable at approximately $50 USD per share with very minor fluctuations loosely based on dividend timing. We anticipate that holders of USFR.d will primarily see dividend-based tax implications.
SPY.d
The SPY.d token issuance and redemption price is also determined by the underlying SPY ETF price on the stock market. The price tracks the S&P 500 Index and can vary over time. Because it is an index composed of many companies from varied industries, the price tends to be more stable than other stocks or ETFs. SPY is the oldest and most liquid ETF in the world and is considered a stable growth ETF in many portfolios. We anticipate that holders of SPY.d will primarily see dividend and capital gains/losses tax implications.
3. Describe the process and expected timeline for liquidation of assets, if given instructions to do so by Arbitrum governance.
The issuance and redemption of dShare tokens is a fully-automated process. Redemption requests are made by sending dShare tokens to the Dinari order contract.
If the US stock market is open, redemption requests will typically take seconds. If the US stock market is closed, redemption requests are queued and executed upon market open. Large redemption requests that exceed Dinari real-time operational liquidity will still be executed in seconds but the return of USDC funds may take up to T+2 business days (typically same-day if before wire cutoff). This is primarily due to the slowness of moving fiat USD through the traditional finance system.
4. What amount of first-loss equity will Sponsor provide to ensure over-collateralization, how is the first-loss equity denominated, and what is the source of capital?
Dinari plans to comply with and exceed at all times the minimum net capital rule outlined by SEC Rule 15c3-1 for broker-dealers. Namely, Dinari will hold funds that exceed the greater of $250,000 or 6-2/3 percent of its aggregate indebtedness (basic method); or, Dinari will hold funds that exceed the greater of $250,000 or 2 percent of customer-related receivables (alternative method). In practice, the amount allocated for first-loss equity has far exceeded the minimum requirements set forth by SEC Rule 15c3-1 to date. First-loss equity would first be denominated by the equity holdings in the underlying position; any excess would be sourced by Dinari equity capital, as appropriate.
5. Describe the liquidity and stability of the proposed underlying assets, including anticipated settlement times from the sale of the underlying to the repayment of ARB.
USFR.d
The underlying assets (USFR stock) is very stable with typical daily pricing aberrations of less than 0.02% and has an average daily trading volume of $190M. Typical transaction times for USFR for issuance or redemption is measured in seconds.
The underlying asset of the WisdomTree Floating Rate ETF (“USFR”) itself are U.S. Treasury Floating Rate Notes which are generally regarded as one of the safest investment instruments in the world and are backed by the full faith and credit of the U.S. Government. In addition to the safety, U.S. Treasury notes are some of the most traded securities available with volumes measuring in hundreds of billions of dollars per day.
SPY.d
The underlying assets (SPY stock) varies depending on the stock market but is typically much more stable than other stocks or ETFs. SPY is the oldest and most liquid ETF on the market with volumes measured in billions of dollars a day. Typical transaction times for SPY for issuance or redemption is measured in seconds.
6. If relying on the blockchain for any of the transactional flows, please describe any blockchain derived risks and mitigations.
Dinari dShare issuance and redemption flows are exclusively based on smart contracts and we rely on the transparency and programmability of the blockchain for all order flows. Blockchain derived risks can be split into a few categories.
- Technical - Our smart contracts support a wide variety of assets and order modes and this naturally introduces technical complexity. We believe that we mitigate technical risks with internal code reviews, extensive automated test environments and external code audits.
- Operational - In addition to smart contracts, there are a number of internal processes that interact with our blockchain contracts to execute orders and move funds. To mitigate these risks, we employ Drata, an external consultant, to audit our corporate controls and processes and ensure adherence to AICPA’s Trust Services Criteria for security, availability, processing integrity, confidentiality, and privacy. We are actively working on SOC 2 Type II compliance.
- Regulatory - The regulatory landscape around the blockchain is still evolving but our goal has always to be transparent and compliant. We have been a registered SEC transfer agent since 2022 and maintain active and direct relationships with both the SEC and FINRA.
- Error/Fraud - In the event of an error or detection of fraudulent activity, the dShare holdings of a wallet may become trade-restricted and/or blacklisted. At Dinari’s discretion and ability to accurately reconcile asset ownership with off-chain processes, dShare tokens are able to be reissued to return rightful ownership.
7. Does the product rely on any derivative product (swaps,OTC agreements?
No. All our products do not rely on derivative products.
8. List all the third party counterparties linked to your assets including and not restricted to prime broker if any, custodian, reporting agent, banks for derivatives or loans and provide primary contact details for the third party counterparties
Dinari utilizes Alpaca Securities LLC as a prime broker and custodian of securities assets. Dinari uses Mercury Bank for banking only (not loans or derivatives).
Alpaca Securities LLC
https://alpaca.markets
support@alpaca.markets
Mercury Bank
9. Can you explain how is risk management (inv and operational) being done? Can you provide a copy of your risk management policy?
Dinari manages risk along a number of different dimensions.
1. Investment:
Dinari issues tokens (dShares) that are backed 1:1 with an underlying equity security or ETF. We mitigate market and liquidity risk by only offering tokenized access whose underlying securities meet certain market capitalization and trading volume thresholds and trade on major stock exchanges, such as the NYSE or Nasdaq. In addition, none of our customers are currently using margin accounts or are able to borrow against their tokens. If we were to plan to offer customers the use of margin accounts in the future, Dinari would subject them to regulatory requirements, such as Federal Reserve Regulation T and FINRA Rule 4210, as well as to the margin requirements of our broker-dealer partner, Alpaca Securities.
From a portfolio perspective, while the majority of assets under management relate to customer securities and funds held by Alpaca, Dinari does own a small amount of securities itself for the sole purpose of facilitating market-making and liquidity. Dinari actively monitors the amount of Dinari-owned securities to ensure that it does not exceed a certain threshold; historically, this figure has averaged less than two percent of Dinari’s equity capital.
2. Operational
- Customer: All users must undergo KYB/KYC processes with Dinari’s third-party partners, as well as pass AML/CTF procedures, before gaining approval to use the Dinari platform. Additionally, because Dinari solely controls the mint and burn process of our tokens, Dinari controls the redemption process of those tokens as well. Dinari also has the unilateral ability to restrict customer transaction activity on the Dinari platform should any user be found to be in violation of our policies.
- Internal Controls: Dinari employs Drata, an external consultant, to audit our corporate controls and processes and ensure adherence to AICPA’s Trust Services Criteria for security, availability, processing integrity, confidentiality, and privacy. We also employ Fordefi, an institutional multi-party computation (MPC) wallet and security solution that is SOC 2 Type II-compliant and centralizes control over and access to our portfolio of crypto wallets.
- IT Security: In addition to internal controls, Dinari operates a centralized Identity and Access Management system using OAuth, SAML and multi-factor authentication to centrally manage access to all internal systems, production/staging environments and even most external systems. Dinari employs Drata to continuously audit and monitor access controls to proactively secure our systems and endpoints.
Performance reporting
1. What are your proposed performance benchmarks? If this is substantially different from the underlying assets, please explain why.
We measure performance of USFR.d in APY and should be nearly identical to the underlying assets. Performance for SPY.d will depend more on the performance of SPY in the stock market.
2. Describe the content, format, preparation process, and cadence of performance reports. This should include proof of reserves, if appropriate. Please include a sample report.
Dinari publishes a live transparency page for all dShares including USFR.d and SPY.d
https://dinari.com/transparency
Our transparency page includes information of the last few transactions, live token counts and current asset holdings. All our tokens are 100% collateralized 1:1 with the underlying asset.
In addition to this, we publish monthly brokerage holding reports that are prepared by Alpaca Securities LLC and acts as a proof-of-reserves. We have attached a sample report here.
3. Who provides the performance reports in respect of the underlying assets?
WisdomTree as the asset manager provides the performance reports for USFR. State Street Global Advisors SPDR provides the performance reports for SPY. Financial performance reports for all publicly traded companies is already highly regulated and audited.
4. Describe any formal audit process and timing of such audits.
Dinari does not provide the performance reports and does not audit them. As a publicly-traded fund in a regulated industry, WisdomTree/State Street Global Advisors are already subject to numerous financial auditing requirements.
Pricing
1. Provide a copy of your standard contract, or one similar to what is being proposed here.
The Arbitrum Foundation would operate under our general terms and conditions found here. Typically, Dinari customers aren’t required to operate under contract.
2. Fee summary: Inclusive of the full scope of services requested. Product Fee schedule If asset based Fee calculation for our plan if asset based Annual fee if flat fee Any other fees (including redemption or minting fees)
Dinari is offering significantly discounted access to USFR.d and/or SPY.d for the Arbitrum Foundation with an investment of $5M or more:
Arbitrum Foundation Partner Fee Schedule
- Trading Fee (ARB/USDC): 0% (fee waived)
- Trading Fee (ARB/USDT): 0.10% (80% discount)
- Order Fee: $1 USDC/USDT
- Dividend Fee: 1% (80% discount)
Fees not included:
- Network fees paid directly to the network or in stablecoin via our relayer system.
- ARB exchange fees/slippage.
The Dinari dShares Retail Fee Schedule which can be found here as a comparison: Fees | dShares User Guide | Dinari Documentation.
3. Describe frequency of fee payment and its position vis-a-vis payment priority compared with other expenses (i.e., cash waterfall)
Trading fees are paid as a percentage of the order value upon minting and redemption of tokens. Order fees are paid upon order placement. Dividend fees are paid upon distribution. There are no ongoing maintenance or management fees.
Smart Contract/Architecture
1. How many audits have you had and name of auditors? Please provide a copy of reports.
- Sherlock - 8/11/2023 - https://assets.dinari.com/audits/Audit_Sherlock_230811.pdf
- Hacken - 12/12/2023 - https://assets.dinari.com/audits/Audit_Hacken_231212.pdf
2. Is the project permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?
Yes. Dinari performs KYC or KYB for all investors before issuance or redemption of any dShare as part of our ongoing compliance with the SEC, OFAC and other regulatory requirements. Personally identifying information (“PII”) is used, held and deleted in accordance to our data protection and privacy policies found here: Dinari Inc. Privacy Policy. PII is used solely for KYC/KYB purposes.
In addition to KYC/KYB, Dinari operates a robust anti-money laundering (“AML”) program in accordance with federal regulations and consisting of a few major parts.
- Customer due diligence (CDD): We collect and verify the identity of all new customers and. We also conduct enhanced due diligence (EDD) on high-risk customers, PEP, businesses and others.
- Transaction/Wallet monitoring: We monitor all customer wallets and transactions for suspicious activity, and we report any suspicious transactions to the appropriate authorities. Wallets are periodically rescreened to identify suspicious transactions even after trading.
- Risk assessment: We conduct periodic risk assessments to review and update our money laundering and terrorist financing risks.
- Training: All of our employees are trained on our AML policies and procedures.
Dinari uses Persona and Elliptic as KYB/KYC and AML service providers.
Wallets addresses must be whitelisted by our KYC and AML processes before trading is allowed. Subsequently, if fraud or error is reported or detected, Dinari reserves the right to blacklist or trade-restrict the dShares in a wallet. Token balances may be reconciled off-chain and assets reissued at Dinari’s discretion.
3. Is the product present on several chains? Are there any cross chain interactions?
Dinari dShares are currently available on Arbitrum One, Ethereum Mainnet and Blast. There are no cross-chain interactions for our dShares product…
4. Are the RWA tokens being used in any other protocols? Please describe the various components of the ecosystem
Selected Dinari dShares are currently traded on the Camelot DEX on Arbitrum One. USFR.d is currently the primary treasury component for USD+, Dinari’s yield-bearing stablecoin.
5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?
Dinari dShares are built on top of a robust and audited set of smart contracts. Investors rely on Dinari to execute said contracts on issuance and redemption in a manner consistent with our ethical and financial duty. For example, users trust that we are trading their funds in accordance with best execution, a responsibility that is shared with our brokerage partners.
There are a number of trusted roles both automated and human. Production automated systems, secrets and access are segregated from the rest of the company in accordance with SOC 2 best practices. Trusted human roles, dashboards and controls are authorized, authenticated and audited by our comprehensive Identity Access Management system built with Google, AWS and Retool. All our identity and multi-factor authentication vendors are SOC 2 Type II compliant.
6. Is there any custom logic required for your RWA token? If so please give any details.
Dinari dShares are based on standard ERC-20 token smart contracts. There is a small amount of custom logic to manage transfer restrictions of our tokens in a wallet so we are able to fulfill our AML commitments and regulatory compliance.
Supplementary
- Please attach any further information or documents you feel would help the screening committee or ARB tokenholders make an informed decision.