On June 27, Koinex was uprooted, and the credit goes to the regulations imposed by the Indian Government. A company that had over a million registered users, 20 million trading orders, and a trading volume of $3 billion-letting it all go overnight is tough, but they had to do it.
India is a country that is advancing towards new technology and accepting changes in every field to become a superpower in the world. But one field that always faces issues is finance, to be more specific, the working of cryptocurrencies.
Over the years, a lot of people have shown interest in cryptocurrencies of various types and have invested in them. Seeing the rising trends in the cryptocurrency exchange in India, a lot of blockchain-based startups came forward to help the users by providing them platforms for trading.
Koinex was one of the leading multi-cryptocurrency exchange in the country. It was founded by Rakesh Yadav, Aditya Naik, and Rahul Raj in 2017. It became popular among the users but this fame was shortlived as they had to shut down their operations because of the strict government guidelines in India which don’t allow trading of cryptocurrencies in the country.
What was Koinex?
Koinex was a platform that helped users to practice real-time trading of multiple cryptocurrencies like Bitcoin, Ethereum, Ripple, and others at one place. Koinex was an open order book exchange that offered transparent pricing for all the listed digital assets allowing the buyers to invest in the desired cryptocurrency and for sellers to ask for a price for the cryptocurrency in which they wish to trade.
Koinex, when launched, showed great potential in the world of cryptocurrencies, and this leads to the course of funding. It raised an undisclosed amount in the form of funding from investors such as Dirk van Quaquebeke, Managing Partner for Beenext and from Daniel Morehead, founder, and CEO of Pantera Capital.
Within 4 months of its functioning, Koinex made a trading volume of about $265 Million and had a record of 40,000 users signing up within 24 hours. At its peak usage, Koinex claimed to have about 100,000 users.
Crypto v/s Indian Government-a not so cold war
Ever since cryptocurrencies were introduced in India, they have had a hard time functioning within the country. People have shown a massive interest in cryptocurrencies and have invested in them to make some benefits and earn money.
But recently the Government has been very strict about the use of cryptocurrencies and have asked the companies to stop their functioning and to end the trading of cryptocurrencies.
The first major problem for the crypto startups was in April 2018 when RBI(Reserve Bank of India) issued a notice with instructions for the financial services providers to stop working with individuals and companies dealing in virtual currencies. They further asked them to block/seize such transactions in the future.
Later that year, the notice released by RBI was challenged in the Supreme Court of India, but it has changed nothing in reality. Many cryptocurrency trading startups such as Zebpay, Coinome had to shut down their businesses, and now Koinex had to go through the same. A panel of ministers and advisors also suggested 10-year imprisonment for those who are found using crypto-assets.
In an article, Koinex founder, Rahul Raj wrote that they have decided to shut down their operation because of the delay caused by the Government in explaining the proper framework for the fair working of cryptocurrencies and regular difficulties caused by banking sectors in their services.
We've to regretfully inform all our users that we've decided to permanently disable all digital assets trading services on all Koinex platforms from 2 PM IST today (27th June 2019). Please read the announcement blog from our co-founders here: https://t.co/AVaHppwgEJ
— Koinex (@koinexindia) June 27, 2019
Started from the bottom, unfortunately, we back
Koinex gained popularity and name in no time, but unfortunately, that didn’t last long. With the strict guidelines imposed by the Government regarding cryptocurrencies and its usage, it has become impossible for crypto startups to operate in India.
Koinex decided to shut down their operations because for almost a year; they were facing issues in operating their digital trading assets as the bank accounts used for so were closed.
Along with this Koinex co-founder Raj mentioned how they were facing problems of the payments going through from the payment gateways. Bank accounts that were used for trading of digital assets were either facing blocking of transactions, and sometimes the whole account would get blocked.
The companies who were associated with them and their employees were also forced to answer to the banking services even for any non-crypto payment like salaries, purchase of equipment and rent payments.
Keeping customers first even during a crisis
The company had to arrange for funds to pay back to their customers as they had invested their hard-earned money into the cryptocurrencies as an investment. The trading services were disabled on 27th June 2019 onwards, and they have decided to take snapshots of the remaining balances of the accounts to give back the money to the people again.
Koinex is planning to release all the user deposits back to them by charging a small convenience fee ranging from INR 10 to INR 2000 depending on the user balance. They have also asked the users to withdraw all the funds from their digital wallets before 15th July 2019, after that the funds will be lost and the user won’t be given any compensation.
The recent events that have taken place in India, and with global platforms like Zebpay, Koinex, Unocoin facing backlashes from the Government, the future of cryptocurrency looks dark in India, and it’s disappointing how good talent gets wasted here.
Zebpay Announcement: Your Rupee Withdrawals Could Stop pic.twitter.com/DFQOWC1gBs
— zebpay (@zebpay) June 21, 2018
What are your views on the use of cryptocurrency and whether they should be made legal in the country or not? Let us know in the comments section.