Koinex, an Indian cryptocurrency exchange, has shut down.

In India's War on Cryptocurrency, Crypto Exchange Koinex Suffers Losses.

Jan 02, 2023

What was Koinex?

Koinex was founded in India in the summer of 2017 and quickly grew into a large cryptocurrency exchange, reaching its peak in December 2017. In just 24 hours, the platform recorded a staggering $246 million in trading volume and added up to 45,000 new users!

The plan was to introduce India to the world of cryptocurrencies. Users can trade Bitcoin, Ethereum, Bitcoin Cash, Ripple, and many other well-known cryptocurrencies on the platform on a peer-to-peer basis.

Users could benefit from transparent pricing for each currency, allowing buyers to place bids and sellers to place "asks." Koinex also provided a highly secure wallet in which users could keep their money.

Koinex also raised an undisclosed sum of money from foreign investors.

Why did Koinex go bankrupt?

The Reserve Bank of India issued a statement on April 6th, 2018 stating that all government-regulated exchange platforms were required to stop trading with and end relationships with any individual or organization that dealt with cryptocurrency transactions, as well as block such transactions from occurring.

Koinex took the case to court and has a writ pending in the Supreme Court of India to this day, but things move slowly and there hasn't been any progress in the case so far.

As a result of the statement, all banks in India were barred from dealing with cryptocurrencies, leaving users of the platform with a daunting task: how would they even get their money if they couldn't deposit and withdraw it from their own bank?

As Koinex CEO Rahul Raj stated in a Medium blog post, "the last 14 months have been difficult to operate a digital asset trading business in India, due to the closure of bank accounts holding user deposits."

Forcing law-abiding users to deal with transactions with which their own government is at odds is difficult. It meant that Koinex had to find alternative solutions to ensure that their users got their money's worth.

While there were other payment platforms that worked, Koinex faced a constant stream of challenges, such as payment denials, bank account closures, and operational disruptions. It is critical to note that this also occurred for non-crypto transactions such as salary payments, rent, and equipment purchases.

In other words, because Koinex was associated with cryptocurrency exchanges, many of their employees received a monthly call from their bank in which they were presented with a new payment and bank account problem because they worked for Koinex.

Finally, there were too many barriers to overcome and too little profit to be made from trading cryptocurrencies in India. Nobody makes anything anymore, and the Indian government clearly did not want cryptocurrency to exist. Koinex had no choice but to close their doors.

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