Koinex was set-up in the summer of 2017 and began digital assets exchange services on August 25, 2017. As the first open order-book, fully KYC compliant, multi-asset exchange, they opened the world of blockchains to India, bridging all gaps in trading compared to international counterparts. Within 4 months of operations, Koinex became India’s largest and favourite digital assets exchange — recording $265M in trading volume and on boarding 40K+ new users in 24 hours at peak in the month of December. Koinex also became India’s fastest growing startup to see such metrics and an ultra-quick profitability.
However, this short-lived astronomical growth curve was stalled with the emergence of issues with formal banking channels on which exchange services were deeply dependent on. On April 6, 2018, the Reserve Bank of India issued a circular instructing all regulated financial services entities to exit relationships with companies and individuals dealing in virtual currencies and block all such crypto-related transactions. While the RBI circular, resulting into a complete banking ban, has been challenged in the Supreme Court of India, the status quo since April 2018 continues till today.
According to the co-founder of Koinex, the reason for shutting down Koinex:
The last 14 months have been tough to operate a digital assets trading business in India, on account of the closure of bank accounts holding user deposits. We took on immense financial burden to continue trading of digital assets and allow law-abiding Indians to participate in the decentralized revolution that has swept across the globe. Multiple delays by the government agencies in clarifying the regulatory framework for cryptocurrencies despite our pending writ petition in the Supreme Court of India, coupled with regular disruption in our operations, the final decision has been taken after duly considering all the latest developments in the crypto and blockchain industry in India. We have stayed away from disclosing details to the public in the larger interest of mindfully steering the industry towards positive regulations, but unfortunately we’re not too hopeful that things will change for the better in the near future.
We have consistently been facing denials in payment services from payment gateways, bank account closures and blocking of transactions for trading of digital assets. Even for non-crypto transactions like payment of salary, rent and purchase of equipment, our team members, service providers and vendors have had to answer questions from their respective banks — just because of an association with a digital assets exchange operator. One of the toughest things to handle is explaining to our team members why they get a call from their bank every month at the time of salary credit. The recent news broken by BloombergQuint and later reported by MoneyControl about a proposed piece of legislation called the ‘Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019’ has created enough FUD in the Indian crypto trading community to result into a sharp decline in trading volumes and instil a clear discomfort for all the law-abiding citizens of this great nation.
Amidst all of this, from a basic economic feasibility point of view, it is just not prudent to continue doing this business. The amount of capital, effort and grit that’s required to conduct a complicated business like this is just increasing with no relief in sight — the infrastructure cost alone for operating the exchange platform and ensuring the safety and security of users’ funds is unbelievably high. Adding to that the costs for legal, customer support and a cluster of other functions, continuing to conduct the business is proving to be an unwise idea with no scope to make revenues to cover for them.
Termination of Koinex Services:
Koinex terminated their service on July 15, 2019 and helped users to withdraw their crypto currencies & funds. If you are unaware about this shutdown and still have funds / crypto's in Koinex wallet, then forget about getting it.
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