2020 Sees 75 Crypto Exchanges Closing Their Doors

A minimum of 75 crypto exchanges has been forced to shut down in 2020. The reasons for this can vary, closing shop due to scams, hacks, or quite literally vanishing from the world like an enigma.

A Year Of Many Crumbling Exchanges

This comes from the Crypto Wisser Exchange Graveyard, which stipulates that five of these exchanges were considered scams. Four of these exchanges, including Nerae and Altsbit, were flagged as hacked, crumbling after the backlash.

A total of 31 of these exchanges had been voluntarily shut down for various reasons. However, 34 of these exchanges have been labeled as “MIA,” with the exchange itself vanishing without any explanation. Only two exchanges, Netherlands’ NLexch and Chile’s Chilebit, were shut down as a result of their respective governments’ intervention in 2020, according to this listing.

Trends Conspiring Against Small Projects

As for the “Why”s of this, a few macro trends help explain how so many smaller exchanges have started to crumble. With the growth of DeFi, and the subsequent rise of decentralized exchanges in 2020, has made smaller projects very hard to pull off, proving to be the coffin nail for many.

Alongside this, regulatory pressures have started to ramp up even since the early days of the industry. With all of these new regulatory requirements, while needed for a functional, some exchanges simply couldn’t operate and were forced to shut down. Another key issue for exchanges, is the growing amount of scams and hacks being pushed by criminal elements.

The Big Fish Under Threat

In regard to high-profile exchanges, the latest two to have a cloud go over their futures are KuCoin and BitMEX.

KuCoin, a Singapore-based exchange, suffered a hack now recorded as worth $200 million in late September. Kucoin had managed to scramble around, reassuring its users of its continued functionality by issuing out an array of security updates, providing greater transparency as well. In the most recent announcement, which is dated on the 6th of October, the company is continuing the extensive audits to determine the exact types and amounts of assets affected.

BitMEX, in turn, suffered a filing of criminal charges by the US, even if it’s based in Seychelles. From there, Chainalysis, the crypto security firm, had labeled it as “High Risk, with the firm issuing warnings to an array of high-profile clients. These clients include banks, government agencies, and exchanges. As a result of this, investors aren’t keen to bank their future on BitMEX, with more than $500 million in BTC withdrawn from the exchange.