A report was recently published by cojournal.net, which highlights the number of crypto exchanges that have been unable to survive since 2014. The interesting part of the research is that almost 42% of the crypto trading platforms vanished completely and did not offer any reason for the exchange being shut down.
Reasons of failure
Numerous crypto exchanges have failed since 2014, but what is odd is that 42% of them have offered absolutely no explanations as to why their business shut down. These exchanges just dropped off the face of the industry and did not provide any notice to their clients.
Moreover, exchanges that failed in the last eight years because of business-related reasons were about 22%. Meanwhile, 9% of the platforms had turned out to be fraudulent and crypto scams from the very beginning. In 2018, there were 23 exchanges that had gone under, but this number exploded in 2019 as it rose by 252%.
In 2020, it increased further by 17% but remained at the same level next year i.e. 2021. There has been some improvement in 2022 and if the rest of the year follows the same path as the first six months, then there would be a 55% fall in the number of failures.
According to experts, it is necessary for these metrics to be improved for the good of the crypto industry. The fact is that cryptocurrencies will not be taken seriously and not be able to establish themselves fully if they do not clean up their image and such statistics exist.
As mentioned above, the report highlighted that crypto exchange failures in 2022 will fall by 55% or thereabouts. The cojournal.net report said that as far as vanishing exchanges are concerned, this number could be lower. While regulation is still way behind, there has been some progress and this could make it more difficult for exchanges to vanish without a trace.
This report has emerged at a time when the crypto winter has resulted in a myriad of problems for different crypto companies. In the last few months, there have been a lot of layoffs happening in the crypto industry and thousands of employees have had to lose their jobs.
Furthermore, three prominent companies in the crypto space have become insolvent and have filed for bankruptcy, which includes Celsius Network, Three Arrows Capital (3AC), and Voyager Digital. There are also a number of digital currency platforms that have also frozen their withdrawals.
This move had started with Celsius Network pausing withdrawals and eventually filing for bankruptcy. Therefore, things are not looking good for platforms that are following the same practice. The latest in the series of platforms to make this move was Zipmex, which made the announcement last Wednesday.
It said that the crypto market downturn had resulted in financial difficulties for Zipmex’s partners and this had prompted the freeze. The Securities and Exchange Commission (SEC) in Thailand questioned Zipmex about its reasons for taking this action.