Crypto exchange Gatecoin has shut its doors and entered into liquidation after receiving a court order.
The Hong Kong-based exchange posted a notification on its website to announce the fate of the exchange.
“In light of the circumstances, we have suffered financial difficulty over a period time to an extent that we are no longer able to support our operation,” the exchange noted. “On 13 March 2019, the court has granted a winding-up order against our company.”
In 2016, Gatecoin endured a loss of nearly $2 million after an attack on the exchange which led to the theft of 185,000 Ethereum and 250 Bitcoins. Though the massive theft ignited the troubles for the exchange, it was not the reason which put it out of business.
Not Our Fault!
Gatecoin, in its statement, blamed the forced liquidation entirely on its third-party payment service provider.
“As you may know, following our issues with our banking partners in September last year, we started working with a Payment Service Provider (PSP) ) which is a fully regulated payment institution by the French regulator,” Gatecoin stated.
“However, that PSP failed to process most of the transfers in a timely manner which in turn almost paralyzed our operation for many months and caused a substantial loss on our side.”
Established in 2013, Gatecoin was one of the first fully regulated cryptocurrency exchange. Like most of the early market players, it focussed its services to Bitcoin , Ethereum, and Ethereum-based altcoins.
Detailing the impact of the PSP’s actions on the crypto trading services, the exchange added: “Even after we managed to mitigate our loss by replacing that PSP with more reliable alternatives to process our clients’ transfers in September 2018, the situation did not improve because that PSP retained a large part of our funds. After months spent trying to recover those funds, we commenced legal action against that PSP but were advised that it is unlikely that we would be able to recover the funds from them in full.”
Lesson Learned?
Gatecoin and Mt. Gox were two established crypto exchange which faced attack even before the boom in the sector in 2017. However, after years, the crypto exchanges are still vulnerable as earlier this year we have witnessed the theft of an estimated $16 million worth of coins from New Zealand-based Cryptopia.
Meanwhile, earlier this month, a report revealed that crypto businesses around the globe are struggling to get basic banking services due to hostility towards the sector.
