As per the official website of Koinex, there are more than 1 million registered users of the exchange. The platform, by far, has executed 20,000 orders which are worth more than 3 Billion U.S. Dollars. Then what caused it to shut down amidst all the great success?
The journey of Koinex crypto exchange began on 25th August 2017 and regretfully ended on 28th June 2019. The long delays, ‘uncertainty and disruptions’ from the Indian banking restrictions and the surrounding regulatory issues compelled the Koinex crypto exchange to shut down permanently. The exchange decided to close off on Thursday. Koinex is the fourth crypto exchange to shut down after Zebpay in last September, Coindelta in March, Coinome in May, this year.
The CEO of the exchange- Rahul Raj explained in a regretful tone that the platform has shut down all its digital assets and exchanges. He further added that the services related to the digital asset will be no longer in function on all the platforms of the company starting from ‘2:00 PM IST on Thursday, June 27, 2019.’ Talking about all the orders that are still open will be canceled by default after this point onwards. As for the funds concerned with those orders, that amount will be returned back to the originating wallets of the users.
As of now, the Koinex crypto wallets are still up and running for the time being till 15th July. The users of the platform are requested to withdraw all of their funds before the deadline. The exchange warned-
Failing to do so may result in forfeiture of their funds, in case we are unable to keep the wallet function alive post the aforementioned timeline.
The company has mentioned that it will capture a snapshot of the users’ wallet balances for the purpose of records.
Funds Release and Koinex’s Voluntary move:
Also, in the coming five weeks, the platform will try to release all the user deposits, and the money will be directed towards the users’ respective accounts. As of now, the funds of the users are kept frozen in the bank accounts. But, just to keep the clients as the priority, Koinex has made arrangements for funds from its personal resources. The company explained that although it is not their legal obligation, but still, they are doing it as a “voluntary move.”
What caused the shutdown?
The Company’s CEO Raj said that RBI’s (Reserve Bank of India) ban on the crypto-banking had a major effect on the company. In 2018, RBI banned the regulated financial institutions from offering any services to crypto-based companies. The ban allowed such institutions a time frame of three months to come out of any such transactional support. Further, the crypto related transactions were also blocked. This ban had a strangulating effect on companies such as Koines, as per Raj.
- The ban was challenged in the Supreme Court of the country, but by far no results have come to surface. As per Raj, the ban made the last 14 months very difficult for the exchange, given the bank accounts were closed that held the platform’s deposits.
- Further, there were many delays in sorting out the regulatory framework for cryptos, despite the submission of a petition by Koinex to the Supreme Court.
- The platform has been facing many denials from various payment services, bank account shutdowns, transaction-blockage on the grounds of trading of the cryptos.
The CEO further explained the plight-
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.
July 23rd has been decided by the Supreme Court of India for the hearing of the writ petitions. There are chances that the regulatory framework for the crypto exchanges may also get looked at. By far, there have been many writ petitions that have been filled out in request to ban the ban. 23rd July is not far off let us see what it holds.
The upcoming crypto bill:
Subhash Chandra Garg, the Secretary of the Department of Economic Affairs and Finance Secretary recently declared that the report about the crypto regulation is all set for submission to the finance minister of India for approval. By far no further details are known about this bill.
As per some sources, the bill is titled- “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019.” Other sources say that there may be decade long imprisonment based on certain types of crypto-related activities.
The CEO of Koinex, Rahul Raj that the guesswork around this proposed bill has already created a lot of ruckus in the Indian crypto community that has had a dipping effect on the crypto trading overall on Koinex.