Another casualty of the continued bear market has been recorded as Hong Kong-based cryptocurrency exchange Gatecoin — a long-standing player in the cryptocurrency space — has been ordered to cease all operations and is entering liquidation following failed attempts at recovering funds apparently lost in a dispute with a payment services provider.
The payment services provider in question was required after Gatecoin’s banking partners turned their backs on the company in September 2018 — two months before the price of Bitcoin (BTC) capitulated to levels well below $4000 per coin.
According to an official statement published on Gatecoin’s corporate website, the problems with the company’s banking partners forced the exchange to turn to an unnamed payment service provider (PSP), which — despite apparently being fully compliant and registered with regulators in France — failed to process transfers in a timely manner. This seeming failure on the part of a legacy financial payments provider allegedly cost Gatecoin significant losses and “almost paralyzed [the] operation.”
Gatecoin’s problems were compounded when the exchange sought “more reliable alternatives.” As a result, the aforementioned PSP allegedly kept control of a large portion of the exchange’s funds.
Though legal action would seemingly help sort out the situation with the problematic PSP, Gatecoin claims that it was advised against pursuing action to recover the funds. States the company:
After months spent trying to recover those funds, we commenced legal action against that PSP but were advised that it is unlikely that we would be able to recover the funds from them in full.
The problematic circumstances ultimately spelled complete failure for Gatecoin, which has now entered liquidation overseen by a court-appointed provisional liquidator. The company claims that it “will assist the liquidation process in order to expedite the realization and redistribution of [its] assets to the creditors.”
What do you think about Gatecoin’s failure? Let us know your thoughts in the comments below!
Images courtesy of Gatecoin, Shutterstock.