Without any prior notice, Singapore's cryptocurrency exchange COSS announced today that it will lock the funds of approximately 200,000 customers (valued at approximately $ 2 million) for a month.
The trading, recharge and withdrawal of the exchange were then suspended immediately, which caused panic in the community, who feared that donations would escape.
However, the company denied the speculation and claimed that the move was necessary to allow the exchange to implement a system-wide upgrade.
A spokesman for COSS, who asked not to be named, said:
"[This exchange] is a mess. Now that we're reorganizing, we decided to stop shipping for four weeks and get scalable, efficient, clear code that fits today's industry."
A spokesman for COSS said management has withheld information about the outage today to prevent large amounts of funds from being transferred, although the upgrade has been going on for months.
In fact, the spokesperson said that they only learned that COSS shut down the system 3 hours before the announcement.
COSS is the abbreviation of Crypto One Stop solution. It was launched in 2017 and is headquartered in Singapore. It provides retail investors with fiat currency entrances in more than 50 currencies, including its coin of the same name, COSS, and IEO services.
The company told some developers two days ago that they should maintain their own code as new APIs may be released in the next few days; a COSS spokesperson confirmed that there is no indication that the exchange will be closed today. "Besides that, everyone was blinded."
Some people in the COSS community are worried that this exchange may be planning to exit the scam, that is, an exchange establishes its own business, and then suddenly drains all funds and disappears forever.
Reddit users say:
"Let me tell you: they will ransack this exchange, and will never open a new one."
But the spokesman insisted that the company had no plans to do evil:
"We didn't run away. I'm still there. We're dealing with everything and being as transparent as possible."
Nothing has happened so far: the company has not withdrawn any funds-at least Ethereum is still there.
Nonetheless, the decision drew sharp criticism. Oliver G, product manager at cryptocurrency exchange CoinMetro, said:
"I disagree with how they communicate today and with this approach. They have frozen clients' funds for 4 weeks without prior notice. There is no excuse or reason for this. I suspect they have no client funds available to withdraw, or There is another serious problem within their organization. "
The spokesman said he didn't know why the team decided to act so suddenly, but he thought it might be the reason for a new investor who agreed to fund the exchange last week: With more funding, COSS Finally able to upgrade its outdated platform.
Even after the network upgrade in December 2018, COSS still lacks the standard features that other exchanges currently have. "We don't have a reliable API, we don't have a trading engine, our UI is terrible … a lot of improvements are needed," the spokesman said.
COSS cannot keep up with competitors, and many exchanges provide complex functions such as "mirroring orders." It lags far behind competitors in 2019. According to CoinGecko, the exchange's capital flow plummeted from about $ 13 million per day in March to about $ 1 million per day in recent weeks.
The spokesman said that COSS could no longer satisfy customers without compromising its financial position. Retail traders no longer need to pay fees; the exchange also offers rebates to those who trade more than $ 5,000; and those who hold COSS tokens will receive 50% of the fees generated by the exchange.
Some customers also put pressure on the exchange to list more tokens to increase liquidity. Last December, user Numorlock wrote on the Telegram group of COSS:
"In order to retain users, we need to list some currencies that have been traded on larger exchanges, but if we want to really get new users or traders, we need to preempt new currencies (before it is popular or still in During development). "
This is a dangerous move in Singapore. The spokesman said that lawyers' fees are not cheap and COSS's cash is not sufficient: In order to cut costs, COSS has outsourced its technical team to India.
Therefore, when new funding arrived, COSS decided to upgrade its platform as soon as possible, even if it meant alienating some of its users. "How long do you want a substandard product to live? You have to upgrade, especially when you realize that (other exchanges) have been upgrading for a year."
The company's business upgrade may be successful and drive future mobility, but is it worth it considering the discomfort to the user?