Unbanked, a cryptocurrency fintech firm that offers services for crypto custody and payments, is the latest company to announce its closure this month. It joins other firms such as BottlePay, HotBit, Teressa, and most recently, TradeBlock. Unbanked cites the challenging regulatory landscape for cryptocurrencies in the United States as a significant factor in its decision to shut down.
In a blog post on May 26, Unbanked’s co-founders, Ian Kane and Daniel Gouldman, shared that when they initially established the company, they believed that choosing the United States as their base would be a wise long-term strategy. However, after five years, they realized that this decision did not yield the expected outcomes.
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According to the executives, they believed that by actively cooperating with regulators and adhering to their demanding procedures, Unbanked would be able to achieve a favorable position in the market, even though other cryptocurrency companies were experiencing rapid growth by operating offshore and evading strict regulations.
Today, we are making the unfortunate decision to wind down Unbanked.
Please withdraw your funds (crypto + USD) as soon as possible from your accounts.
More details are available here: https://t.co/oWR7m3ZqlM
— Unbanked (@UnbankedHQ) May 25, 2023
However, the executives expressed that this approach resulted in a significant amount of time being wasted and excessive expenses incurred. They bluntly stated that regulatory authorities in the United States are actively attempting to impede companies, including banks and financial technology firms, from offering support for cryptocurrency assets, even when those companies are making sincere efforts to comply with regulations and operate in a legitimate manner.
Despite Unbanked’s recent significant collaborations with various companies, including a partnership with the renowned payments company Mastercard, the firm has made the decision to wind down its operations.
According to Unbanked’s co-founders, the firm had anticipated receiving a $5 million funding injection, but unfortunately, it has not materialized as expected. Kane and Gouldman expressed their belief that this outcome is directly linked to the regulatory environment surrounding crypto in the United States, which ultimately hindered Unbanked’s ability to secure sufficient capital and sustain its business operations.
Unbanked recently entered into a term sheet, three weeks ago, for a $5 million investment at a valuation of $20 million. This investment was expected to provide the necessary funds for the firm to not only continue its operations but also expand its services. However, as of now, Unbanked has not received the promised funds.
The company has requested its clients to initiate the process of withdrawing all their funds as quickly as they can.
Crypto firms face a chilling effect:
Unbanked is not the only company facing difficulties. Another company called BottlePay, which facilitated Lightning Network payments for Bitcoin, announced its closure on May 23. The company will cease all services by June 24, 2023, without giving a specific reason for the shutdown.
We're very sorry to say the Bottlepay consumer app will be closing, we've loved every minute of running Bottlepay, and we're incredibly grateful to you, the customers who let us do it for as long as we did.
Link: https://t.co/D5iH97IYMd— Bottlepay (@bottlepay) May 22, 2023
HotBit, a cryptocurrency exchange, made a similar announcement just one day before. They revealed their plans to wind down operations and advised all users to withdraw their funds from the platform as quickly as they can.
HotBit, the cryptocurrency exchange, stated that while the collapse of FTX and the temporary depeg of USD Coin (USDC) impacted its operations, the main reason for its decline was a former team member who became the subject of an investigation in August 2022. HotBit explained that the investigation compelled them to halt their business for several weeks.
Teressa, a fractional-ownership NFT platform, permanently shut down on May 12, stating that its company structure and financial situation would not allow it to continue operating.
Andy Chorlian, co-founder of Tesera, expressed in a now-deleted tweet that the company had made the “extremely difficult decision” to gradually cease all operations in the coming weeks.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
