By Bentley Kapoor (India)
At least 75 cryptocurrency exchanges have been forced to close their doors in 2020. The reasons for closure are different for every exchange, ranging from closing shop because of hacks or scams and some have even vanished from the crypto space like an enigma. The Crypto Wisser Exchange Graveyard provided this information and it stipulated that at least five of these 75 exchanges were considered scams. Four of these, which include Altsbit and Nerae, had suffered from hacks and had not been able to survive the backlash that occurred. Around 31 of these crypto exchanges chose to shut down voluntarily for various reasons.
But, there are 34 crypto exchanges that have just been labelled ‘MIA’, which means that the exchanges ended up vanishing without any possible explanation. According to the listing provided, there were only 2 exchanges that were closed down because of the intervention of their respective governments in 2020. These two exchanges are Chilebit from Chile and NLexch, based in the Netherlands. As far as the reasons behind these exchanges shutting down are concerned, some macro trends highlight how most of the smaller exchanges are unable to survive in the crypto market. With the establishment and rise of decentralized exchanges this year and the massive growth of De-Fi, it has become more difficult than ever to pull off small projects.
This has proven to be the last nail in the coffin for a number of small crypto exchanges in the market. Furthermore, regulatory pressure that had been around since the beginning of the industry, has now begun to ramp up. As there are a lot of new regulatory requirements that have to be fulfilled in order to be functional, some of the exchanges were simply not able to operate and had to be shut down. Another notable issue for crypto exchanges is the growing number of hacks and scams that are being pushed by criminal elements.
When it comes to high-profile cryptocurrency exchanges, there are at least two that have seen their future turn rather bleak and these are BitMEX and KuCoin. The latter is an exchanged based in Singapore and in late September, it suffered from a hacked that wiped out $200 million assets from its hot wallets. KuCoin managed to scramble back up quickly and reassured its users that it would continue to be functional. It went on to issue a variety of security updates and also promised to provide greater transparency to its clients.
On 6th October, the company announced that they would continue extensive audits for determining the exact amount and type of assets that were stolen. BitMEX, on the other hand, has had the US file criminal charges against it, even though it is based in Seychelles. It was labelled as high risk by crypto security firm, Chainalysis and warnings were issued to numerous high-profile clients. These include government agencies, banks and exchanges. Therefore, not a lot of investors are now keen on banking their future on this exchange. Nearly $500 million worth of BTC was withdrawn from BitMEX.
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