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The Hong Kong-based cryptocurrency exchange Gatecoin has closed down its website and replaced it with a simple announcement revealing that they have received a ‘winding up’ order from an unnamed court.
This news comes after a string of unfortunate events that had been weighing down the firm for the past year. Difficulties with 3rd party payment processors, getting hacked, having its banking accounts frozen were just some of the challenges that played a part in breaking down the firm and causing a ‘cease [of] operation with immediate effect’.
The announcement on Gatecoin website reveals that following their long-running issues with traditional banking partners, it started working with a fully regulated payment institution by the French regulator. However, this payment service provider (PSP) failed to process critical transactions in a timely manner. This issue caused paralysis of operations for the firm for months and as one can imagine, caused massive losses for the firm.
Any business is run for a profit. If the company is losing money for such extended periods of times, it not only causes difficulties in finance, it also demotivates the employees and hurts the companies’ reputation with past and future investors and consumers alike. Which means that at this point, Gatecoin desperately needed to pull itself out of the woods in order to have any chance of bouncing back. However, it seems that wasn’t meant to be.
Gatecoin managed to change their payment processor to more reliable alternatives and mitigate their losses to some extent. However, their last PSP retained a large part of their funds. In their announcement, Gatecoin claims that after months of trying to recover these funds, they ended up initiating a legal process against the French regulated PSP. Gatecoin said that at this point they were advised that it was unlikely that they would be able to recover the full extent of their funds from the PSP.
The firm had already been facing financial difficulties. Failure to recover such a large portion of their funds from the PSP proved to be the last straw. Gatecoin said that they are no longer able to support their operation. In the end, the announcement reads:
“On 13 March 2019, the court has granted a winding-up order against our company. A provisional liquidator has been appointed and we have to cease operation with immediate effect. Please rest assured that we will assist the liquidation process in order to expedite the realization and redistribution of our assets to the creditors.”
Thus, Gatecoin informs its users that the exchange has been closed down and attempts to ensure that efforts are being made to pay back creditors in full.