"first big victim of insolvency problem" - will more exchanges shut down?

28 Jan, 2019 | Updated: 28 Jan, 2019
by David Robb
Exchange first big victim of insolvency problem - will more exchanges shut down? was the first major exchange closure of 2019, as it announced today that it would be putting trading on hold indefinitely. Is this an isolated incident, or could it be part of a larger trend?

Read more: Liqui exchange shuts down; "no longer able to provide liquidity"

Based in Ukraine, Liqui was launched in September 2016. Despite being one of the smaller exchanges by trading volume, it was known for offering a variety of different altcoins. 

For the last 24 hours, the HOLO token accounted for around 30 percent of its $55,500 trading volume (down from an average of $85,000 in better times last year). It was in the top 20 places to trade this 28th-largest crypto, presumably because it was offering pairs with BTC, ETH, and USDT, more than even Binance could offer.

This closure was perhaps predictable, as recent months saw a mass delisting of coins from the platform, including some major ones such as WAVES. Some suspected an exit scam might be afoot. The exchange's social media feeds have also been quiet since the end of 2018. Liqui at one time apparently tried to ask users for a monthly subscription fee, but this scheme proved to be unpopular and didn't go ahead.

Read more: exchange faces criticism for short withdrawal notices on delisted coins

In the announcement, Liqui told traders that they "will be able to withdraw your Digital Assets through our website within 30 days after this message was sent. If you did not withdraw delisted Digital Assets since we announced changes in our policies, you will also have another 30 days from the date this message is sent. After 30 days we cannot guarantee that we will be maintaining our website. In this case, all withdrawals will be processed through our support until the last user store his assets with us."

Image from Gyazo

Traders will be scrambling to get their coins off the exchange as soon as possible, and there are apparently already some issues with the withdrawal system preventing this. Some were sad to see the exchange go, but in general, the crypto community doesn't seem particularly sad about the death of Liqui. Many criticised its business model and wondered if we need so many exchanges. 

Although the closure of Liqui may not mean much on its own, some have suggested that the exchange's fortunes might be reflective of a larger trend in the crypto market. As crypto prices continue to fall, trading volumes on many smaller exchanges are following suit, which means lower revenues from fees and commission. Even pump-and-dumps schemes can't be relied on to generate profits anymore, and it could be that a number of other trading platforms are actively preparing to go the way of Liqui, as they can no longer support their infrastructure.

Read more: Is Bitcoin dead? 8 reasons why it is NOTWill Bitcoin recover in 2019?

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