Counterparty risk
Real institutions make this platform work. Each is a counterparty. Each has its own failure modes.
Who the counterparties are:
Four institutional counterparties matter.
The institutional custodian (Ceffu). Holds SMA assets where trading happens. A regulated institutional custodian operating under a separate structure with clients globally.
The asset manager. Runs the trading strategy in the SMA. Separate legal entity from MakeBanc.
The fiat infrastructure provider (Noah). Regulated entity operating fiat virtual accounts, identity verification, and on/off-ramp connections.
MB Technology Ltd (MakeBanc). Cayman Islands company operating the platform.
The architecture is designed so that no single counterparty failure compounds into catastrophic loss across all others.
Custodial counterparty risk:
Ceffu holds SMA assets. If Ceffu failed, became insolvent, or faced a regulatory event, assets would need to be recovered through Ceffu's custody legal framework.
What is in place:
SMA structures segregate your assets from Ceffu's own balance sheet. Not commingled. Not used for Ceffu's lending or trading. Recoverable as client property in a wind-down.
Ceffu is a major institutional custodian with billions in custody, audited financials, and a multi-jurisdiction regulatory profile. These credentials do not eliminate the risk of custodian failure; users should evaluate Ceffu's publicly available information independently.
Residual risk:
Custodian failure is rare but not impossible. 2022 showed that even apparently strong institutions can fail under stress. Recovery can be lengthy. Practical realization may fall short of nominal balance.
The platform is exploring additional custody options to let you choose between custodians. This is a multi-quarter roadmap item.
Strategy asset manager counterparty risk:
The asset manager is separate from MakeBanc. They have trading authority on the SMA but not withdrawal authority.
What is in place:
Asset Managers go through Know Your Partner (KYP) before getting access: entity verification, beneficial ownership, track record, references, and operational security review.
The SMA grants trading rights within defined parameters. It does not grant withdrawal rights. The custodian enforces this technically. The asset manager could not withdraw funds even if they wanted to.
The asset manager sets the strategy's risk parameters (instruments, leverage, exposure) and discloses them to investors. MakeBanc provides the infrastructure; it doesn't monitor or enforce them.
Residual risk:
An asset manager can still mismanage the strategy within allowed parameters. This blurs into strategy risk.
If an asset manager's organization becomes compromised, the platform pauses allocations to their vaults and, depending on severity, initiates orderly redemption.
The platform does not guarantee the continued availability of any specific asset manager.
Noah counterparty risk:
Noah operates fiat infrastructure: virtual accounts, KYC, on-ramp, off-ramp. If Noah has issues, the fiat experience may be affected without touching the on-chain experience.
What is in place:
Noah is licensed in multiple jurisdictions through regulated entities. Strong operational track record.
If Noah's fiat services go down, crypto allocations are unaffected. New fiat allocations may pause. Existing allocations continue. The on/off-ramp routes through Noah, so fiat-to-chain is what depends on Noah's availability.
Residual risk:
A Noah outage temporarily prevents fiat-funded allocations and fiat redemption flows. It does not affect vault positions or the ability to redeem to stablecoins on-chain.
A severe Noah failure would require routing fiat through a different provider. Provider redundancy at the fiat layer is on the roadmap.
MakeBanc counterparty risk:
If MakeBanc itself fails, the platform layer could become unavailable.
What is in place:
The architecture ensures MakeBanc failure does not strand your assets. Vault contracts run independently on Base. SMA agreements between asset managers and Ceffu are direct. The on-chain layer operates regardless of the platform layer.
See If MakeBanc goes offline for the detailed walkthrough.
Residual risk:
The platform provides real value beyond on-chain settlement: NAV calculation, redemption coordination, dashboard, fee distribution. Losing the platform means those services need replacing.
A MakeBanc failure would not prevent you from redeeming vault shares through direct contract interaction. It would make the experience less smooth.
How to think about counterparty risk:
Counterparty risk is not eliminated. It is distributed and limited.
The custodian holds custody but not misusable trading authority. The asset manager has trading authority but not withdrawal authority. Noah handles fiat but not crypto custody. MakeBanc operates the platform but does not hold your assets.
No single counterparty failure causes catastrophic loss across all your exposure. The mitigations are structural. They are also not absolute.
If you are evaluating at institutional scale, review each counterparty separately. The platform makes that diligence possible by being transparent about who they are and how the relationships are structured.
What this is not:
This page does not include counterparty ratings or quantitative risk metrics. Those are not standardized in this asset class.
Asset Manager due diligence reports are available on request for qualified institutional allocators.