The crypto space brought in many opportunities as well as scammers to the market. In that context, over 75 cryptocurrency exchanges have shut down due to scams, hacks, or just faded for unknown reasons so far in 2020. It could be that more cybercriminals have come into the crypto space or just that some might be dropping out due to harsh economic times.
Based on the Crypto Wisser Exchange Graveyard five of the crypto exchanges were labelled as scams. Also, four others including Altsbit, and Nerae, were flagged as being hacked.
Crypto Exchange Shutdown
Cumulatively, 31 were shut down voluntarily while 34 others were labeled as ‘missing in action’ for disappearing without any explanation. Chilean exchange Chilebit and Dutch exchange Nlexch were the only two flagged as being closed down by their respective governments in 2020.
Some macro trends exist which help explain why very many of the smaller exchanges are failing. The thriving of DeFi together with the surge of decentralized exchanges this year has greatly affected many of the smaller operations.
Notably, regulatory pressure has also increased starting from the early days of the industry and most exchanges just have failed to keep up with the requirements. Scams and hacks are also cited as major issues for these exchanges.
The most notable high profile exchanges that have clouded over their futures are KuCoin and BitMEX. After the filing of criminal charges against BitMEX executives in the past week for banking regulation violations, Chainalysis crypto security company has labeled the exchange as a ‘high risk’.
This security company issued a warning to many of its high-profile clients including government agencies, exchanges, and banks. They informed their clients that any exchange that has some form of criminal charges brought against it should automatically be considered as high risk.
Today, some investors appear wary of BitMEX’s future viability with over $500 million worth of BTC withdrawn from the exchange between September 30 and October 3, according to Coin Metrics.
KuCoin, a Singapore-based exchange suffered a $200 million hack in late September. However, it scrambled to reassure traders and investors by issuing multiple security updates about that incident to provide transparency. The latest announcement was updated on October 6. The company continues with many audits into different assets affected by the hacking.
Crypto exchanges are not a secluded group that is disappearing at the moment. Based on the user-generated content site deadcoins.com there are around 2,000 altcoins and tokens that are extinct.
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