4 cryptocurrency exchanges closed in 2019: what happened?

06 Feb, 2019 | Updated: 06 Feb, 2019
by Richard Allen
Analysis
4 cryptocurrency exchanges closed in 2019: what happened?

In the first two months of 2019, 4 cryptocurrency exchanges have had to shut down, either permanently or indefinitely. This is an overview of the crypto exchanges that had to close. What actually happened to them? 

While the longest crypto bear market in history has had a big hand in this, other factors have contributed as well. 

CRYPTOPIA
Like hacks, for example. The most recent of which left New Zealand crypto exchange Cryptopia with the loss of $16 million worth of crypto.

On January 14, Cryptopia went into maintenance mode, announcing via Twitter that "We are currently experiencing an unscheduled maintenance, we are working to resume services as soon as possible. We will keep you updated."

After more than 18 hours of downtime with no updates, Cryptopia released a statement explaining that the exchange had been hacked and suffered “significant losses.” A police investigation was launched shortly afterwards.

On January 21, a report by Elementus found that “One possible explanation is that Cryptopia had their private keys stored in a single server with no redundancy. If the thieves managed to gain access to this server, they could have downloaded the private keys before wiping them from the server, leaving Cryptopia unable to access their own wallets."

Then, on January 25, New Zealand police announced that Cryptopia may reopen sometime in early February. However, a day later, the exchange was hacked again this time leading to the loss of $180,000 worth of Ethereum.

The latest reports indicate that New Zealand police are unequipped to deal with such a hack, with security expert Alex Sims stating “No one seems to have a clue what’s going on.”

Read more: The Cryptopia Hack Timeline: as it happened

LIQUI.IO
Liqui.io was the first exchange to permanently shut down this year. According to the official, heartfelt report, the Ukrainian exchange claimed that it was "no longer able to provide liquidity for the Users left. We also do not see any economic point in providing you with our services,” explaining that it was no longer able to provide a level of trading infrastructure that they felt their customers deserved.

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

Warning signs started appearing near the end of last year when the exchange began delisting large numbers of tokens, calling into question the platform’s long-term viability.

As is often the case, questions began arising over whether this was another exit scam. The main reason for this being that the relatively minor altcoin HOT briefly hit the top 3 trading pairs and accounted for 30% of the exchange’s total trades.

According to the official statement, the exchange “may be back soon,” but that is entirely dependent on the market, which Liqui state has “changed significantly.”

Read more: Liqui.io exchange - why did it have to shut down?

COINPULSE
Much like Liqui, CoinPulse was also a victim of liquidity issues. The exchange announced on Twitter that it had been working with investors in an attempt to keep the exchange afloat, but admitted it was unsuccessful in the effort, and announced it was going into “indefinite maintenance.”

Users have until February 7 to withdraw all their funds, stating on January 31 that:

“In next one week, we expect all users to move their funds out of CoinPulse wallets to their personal wallets or other exchanges to avoid them being locked out during the maintenance.”

The exchange is currently seeking investors “to acquire Coinpulse (which includes the exchange, website, its trademark and roughly 50M CPEX dev/unused tokens).”

Read more: CoinPulse Exchange "headed for indefinite maintenance"

QUADRIGACX
The tale that is QuadrigaCX began with the death of its founder, Gerald Cotton. Cotton allegedly died in India on December 9 last year after complications with Crohn’s disease. Things only get worse from here.

Read more: Who is Gerald Cotten, the allegedly dead co-founder and CEO of Quadriga CX?

Shortly after his death was made public, Canada’s largest crypto exchange went offline, citing unannounced system maintenance upgrades. Sometime later, Cotton’s Estate Executor, Jennifer Robertson signed an affidavit in support of consumer protection, stating:

“After Gerry’s death, Quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost.”

When Cotton died, he took the private keys to $190 million worth of crypto with him, leaving hundreds of thousands of Quadriga users without their investments, and apparently no way for the exchange to gain access.

As more details emerge about the case the more suspicious the whole thing becomes, giving more validity to the claim that this is some form of elaborate exit scam. The latest piece of news to give credit to this claim is the discovery that Quadriga co-founder, Michael Patryn doesn’t actually exist. It’s an alias used by convicted criminal Omar Dhanani, who was charged with fraud and released in 2007.

Read more: What we know about the Quadriga story so far

A recent petition has been doing that rounds that’s looking to encourage Kraken to buy out Quadriga.

The details of the case are still emerging, but it doesn’t look like it’s going to be a happy ending for Quadriga.

Read more: The QuadrigaCX timeline: as it happened

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