Gatecoin Shuts Down
March 15, 2019 10:50 am
After suffering for a high profile theft that resulted in a loss of $2 million, Gatecoin is finally shutting down. The company was one of the first digital asset exchange service.
According to a recent post by Gatecoin’s team, their payment services problems ended up paralyzing the company’s operations for months, resulting in substantial losses from which the company could not recover from.
The post said
“On March 2019, the court has granted a winding-up order gainst out company. A provisional liquidator has been appointed and we have to cease operation with immediate effect. Please rest assured that we will assist the liquidation process in order to expedite the realization and redistribution of our assets to the creditors.”
It appears that Gatecoin is still trying to recover from the hack that it faced three years back. This hack resulted in the loss of 185,000 Ethereum ($24.2 million) and 250 Bitcoin ($960,000) stolen from the company’s hot wallet. All these cryptocurrencies belonged to the platform’s users.
When the hack was executed the total loss for the company was about $2 million dollars. However, when the crypto market was running strong, their Ethereum holdings alone were worth more than $203 million. In January 2018, Gatecoin was processing about $17 million in cryptocurrency trading volume, a figure which has dropped significantly over time.
Despite these tough conditions, Gatecoin blames the third party payment service provider (PSP) saying that they failed to process transactions on time.
“Even after we managed to mitigate our loss by replacing that PSP with more reliable alternatives to process our clients’ transfers in September 2019, the situation did not improve because that PSP retained a large part of our funds. 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.”
Although the problem started three years ago, the banking disruptions that followed significantly added to the company’s troubles. Since September 2017, their Hong-Kong-based accounts were suddenly frozen.