Koinex, India's largest cryptocurrency exchange, today announced the closure of the station, which will stop all trading services at 5 pm Beijing time.
Koinex co-founder and CEO Rahul Raj published the news in an article. In his article, he pointed out that the early ban on financial institutions from providing financial services to cryptocurrency companies has caused them to struggle, and India’s delay in giving exact cryptocurrency regulations has made them even more difficult.
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Koinex's trading volume grew rapidly in 2017, breaking through $265 million. However, after the announcement of the central bank, more and more domestic users choose to use overseas platforms. In addition, Koinex's bank account has been closed, with a large amount of user funds, coupled with the pressure of its operating costs, the exchange had to choose to shut down.
It is worth noting that Koinex is not the only exchange that has opted out due to policy uncertainty. Coindelta, Coinome and Zebpay are all precedents, and Zebpay has chosen to go to sea.
The following is the notice of the closing of the station issued by Rahul Raj:
After months of uncertainty and confusion, we regret to decide to stop all digital asset trading services and operations today. There is no doubt that this is a sad day for all of India's digital assets and blockchain enthusiasts.
Simple background introduction
We established Koinex in the summer of 2017 and began offering digital asset trading services on August 25, 2017. As the first platform to open, fully compliant and provide multiple types of asset trading, we opened the door to the blockchain world for India, making up for all trade gaps compared to international counterparts. Within four months of operation, Koinex became India's largest and most popular digital asset exchange with a transaction volume of $265 million and peaked in December last year, adding 40,000 new users within 24 hours. Koinex has also become India's fastest growing start-up, witnessing such indicators and ultra-fast profitability.
However, as foreign exchange services are heavily dependent on formal banking channels, this channel has problems and our short-term growth trend has stalled. On April 6, 2018, the Bank of India issued a notice requesting all compliant financial services entities to cease cooperation with companies and individuals engaged in virtual currency transactions and to ban all transactions related to cryptocurrencies. The notice from the Bank of India has evolved into a comprehensive bank ban, and although the notice was questioned in the Supreme Court of India, this situation has continued to this day since April 2018.
Why is Koinex going to shut down?
In the past 14 months, the operation of digital asset trading in India has been quite difficult due to the closure of bank accounts with user funds. In order to continue the digital asset trading and let the law-abiding Indians participate in the decentralized revolution sweeping the globe, we have assumed enormous financial pressure. Although our willingness to submit to the Supreme Court of India has not yet yielded results, government agencies have repeatedly delayed the confirmation of the cryptocurrency regulatory framework, coupled with the blows we have faced in the course of our operations, through recent developments in the Indian cryptocurrency and blockchain industries. Considering, we made the final decision. In order to protect the interests of the industry and carefully guide the industry towards a positive regulatory direction, we have not disclosed many details to the public, but unfortunately, we do not have much hope for the recent improvement.
The payment gateway has been refusing to provide us with payment services, our bank accounts have been closed, and digital asset transactions have been blocked. Even for non-cryptocurrency transactions like payroll, rent, and equipment purchases, our team members, service providers, and suppliers have to accept bank cross-examination because they are all connected to digital asset transactions. One of the most difficult situations to deal with is to explain to our team members why they receive a phone call from the bank every month when they pay. BloombergQuint and MoneyControl recently released a report on the ban on cryptocurrency and digital currency regulation bill 2019, which brought a large amount of FUD in the Indian cryptocurrency trading community, which led to a sharp decline in trading volume, which was clearly instilled by law-abiding Indians. Negative emotions.
Based on these circumstances, it is unwise to continue this business from the perspective of the most basic economic feasibility. The capital, effort and courage needed to carry out such a complex business are increasing, and the infrastructure costs required to operate the exchange platform and ensure the safety and security of user funds are incredibly high. Coupled with the cost of legal, customer support and a range of other features, continuing this business proved to be an unwise idea because there is not enough revenue to cover these costs.
Some important days and details
On Thursday, June 27, 2019, at 2 pm (that is, 5 pm on Thursday, June 27, 2019 Beijing time), our platform's digital asset trading service will be permanently disabled. All outstanding orders will be automatically cancelled after the deadline and the funds will be returned to the corresponding wallet. Ask users to plan their trading activities and close their orders.
At that time we will take a snapshot of the wallet balance and will immediately begin paying the INR (Indian Rupee) balance. Because the bank account with user funds is still frozen, we will use our own resources to return the funds. We will do our best to return the funds to our users and mitigate their impact on account freezes. Although this is not a legal obligation that we must bear, we are willing to do so only to ease the burden on our users. Our users have confidence and support for our business, which is the way we express our gratitude and farewell.
Nevertheless, we want to emphasize that this is done only on a voluntary basis, in good faith, and in a way that we can afford. We reiterate that this portion of the funds used to repay the frozen user balance is paid for with our own resources, and that the payment of these funds comes at a price. In the next 5 weeks, we will attempt to release all user deposits to their bank account after charging a certain fee (according to the INR wallet balance, between INR 10 and INR 2000).
The digital asset wallet can still be used normally. Users must withdraw all funds from the platform before 9:00 pm on July 15, 2019 (ie, 11:30 pm, July 15, 2019 Beijing time), otherwise they may cause their funds. Lost, because we may not be able to guarantee the normal use of the wallet after the above time.
Our customer support team will resolve all issues for all users throughout the transition period. We will also continue to respond to all social media channels, and we urge users to use only the official communication model to avoid any problems that may be encountered.
Many thanks to our users and communities
We sincerely thank every user of Koinex. This has been the driving force for the entire team to continue to struggle and solve all the problems encountered in the past year. Our product innovations, regulatory documents and reports submitted to the Bank of India, and the courage to submit willingness to the central bank ban have made it possible for our users to interact with future technologies. We do everything we can to reward us for all the love, support and encouragement we receive from this wonderful journey, and we are grateful and proud.
We also want to thank the founders of other exchanges, thank the reporters for spreading the right information and proposing the right direction for discussion, thanks to the founders of other blockchain projects and others who insist on the right direction.
What is Koinex going to do next?
As a group of dynamic, product-oriented professionals, we will continue to serve the Indian people. We will continue to focus on achieving financial independence and deepening the goal of inclusive finance, even if digital assets are no longer a tool for us to achieve these goals. India is a dynamic economic power, and we are looking for the next big challenge to promote economic growth and change the lives of 1 billion people.
Victory belongs to India.