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Crypto exchanges keep closing: what happens if a crypto exchange goes bust?

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what happens if crypto exchange goes bust

A few days ago, Coinjournal presented a report on the number of exchanges that went bankrupt. As it turned out, from 2014 to 2022 at least 42 percent of the platforms stopped working completely and never came back. Over the past four years, the number of bankruptcies has increased significantly. In 2018, 23 exchanges went bankrupt. In 2019, that number increased by 252 percent. In 2020, another 17%. What should users do in this situation? Can you use a cryptocurrency exchange?

In 2021, the number of bankruptcies decreased slightly. But considering the situation now, when the market has been dominated by crypto winter for several months and the forecasts are disappointing, the number of bankrupt platforms will increase again. So before you transfer money, find out, is a crypto exchange legit?

What happens if a crypto exchange goes bankrupt: causes of exchange closures in recent years?

The closure and bankruptcy of cryptocurrency exchanges is caused by a complex of reasons. This leads to site closures; customers can’t withdraw funds, and administration stops communicating with them.

Scam

Exchanges are closed because they are scam projects. A scam is a financial scam aimed at bringing profit only to the organizers of the scheme. A scam is also a deliberate bankruptcy of the company, stopping any payments to the clients. Even though the network indicates a set of signs indicating that the project may be a scam, users still become their victims.

Fraudsters have come up with more and more sophisticated schemes to defraud users. Not infrequently, even experienced investors invest in such exchangers and then cannot return the funds because the sites stop operating. The administration disappears with the looted finances.

Pressure from the regulators

Another reason for the elimination of stock exchanges is the pressure from government regulators. They impose more and more stringent rules to control exchanges. The reason for such increased control is to minimize the risk of criminal use of cryptocurrencies and circumventing sanctions with them.

Recall that in January 2022 in the EU began to work. 5 Directive. It obliges all cryptocurrency companies to verify every client working with digital assets.

Not all exchanges can withstand the pressure and control of state supervisors and regulators.

Exchange hacks

Exchanges are also closing due to being attacked by cybercriminals. It is impossible to predict which exchange will be attacked. Hackers carefully look for vulnerabilities in exchanges’ security systems before hacking. Sometimes attacks result in a large percentage of customer funds being stolen. Exchanges are then unable to reimburse users and shut down.

Incorrect strategy of site development

Incorrect strategy means miscalculations of exchanges’ management, lack of experienced team of marketers, unable to increase the customer base. Because competition in the market is increasing, sites that could not offer exclusive tools for working with assets to customers become outsiders.

The number of transactions on them is reduced; capitalization is falling; customers are leaving for other platforms. Moreover, this can happen even to platforms operating for 5-10 years.

Results

If a crypto exchange goes bankrupt, you probably won’t see your money again. There are a lot of reasons exchanges are closed and stop functioning. Most likely, in 2022, the number of exchanges that will have to close will increase compared to 2021. The long recession in the market, scandals with projects such as Terra, accusations from regulators of illegal trading, hacker attacks, all this does not give cause for optimism.

Cryptocurrency

Dogecoin (DOGE) Rally or More Pain for the Bulls: What’s Next for the Meme Coin

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TL;DR

  • Dogecoin (DOGE) has dropped to around $0.14, a 12% decline in a week, but some analysts expect a potential price surge based on technical patterns.
  • Market analysis shows DOGE has strong support at $0.115 and resistance at $0.16, with an RSI of 48 indicating it is neither overbought nor oversold.

Where’s DOGE Headed?

The largest meme coin in terms of market capitalization – Dogecoin (DOGE) – has been heavily affected by the recent market decline. Its price tumbled to approximately $0.14, representing a 12% plunge on a seven-day scale. 

DOGE Price
DOGE Price, Source: CoinGecko

Despite the downtrend, many X users expect new explosive moves from DOGE. An example is CryptoJack, who anticipates a substantial uptick once the asset’s price breaks out from a certain descending pattern. He envisioned a 55% increase to as high as $0.22, promising to enter a long position.

Trader Tardigrade speculated, too, claiming that DOGE has been following a specific bullish parallel channel that could eventually lead to a price surge of over $12. The trader paid particular attention to the $1.40 resistance level, which might be reached sometime next year. 

The market intelligence platform IntoTheBlock recently suggested that the meme coin is positioned “above a significant on-chain support level.” The entity estimated that 45 million assets were accumulated at an average price of $0.115, “indicating a strong demand zone that could prove important if the market shows weakness.” 

“On the upside, DOGE may face resistance around the $0.16 level, where 20 billion DOGE is presently held at a loss,” IntoTheBlock added.

Previous Predictions and On-Chain Metrics

Altcoin Sherpa and KALEO are also among those who recently forecasted a bright future for DOGE. The former expects the meme coin “to do something stupid later this year, and there’s nothing you can do about it.” The analyst claimed that dealing with it is one of “the safest trades” during the next bull cycle.

KALEO went even further, assuming that DOGE may outperform Bitcoin (BTC) due to the assumption that the industry is in a “meme super cycle.” 

One essential on-chain indicator that signals a resurgence for the asset is the Relative Strength Index (RSI). This technical analysis tool determines whether the cryptocurrency is overbought or oversold. It ranges from 0 to 100, and a ratio above 70 suggests a selling opportunity. The RSI currently stands at 48 and has not crossed the aforementioned level since May 21.

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Bitcoin Struggles at $67K as Polkadot (DOT) Tests $6.5 Resistance (Market Watch)

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The cryptocurrency market has been trending sideways for the past few days, following the considerable declines from earlier in the week. It appears that traders are now looking for a direction, and major cryptocurrencies trade around important levels.

Let’s start with Bitcoin.

Bitcoin Struggles at $67K

Bitcoin’s price seems incapable of moving past the $67K definitively, having dropped toward it earlier in the week. At the time of this writing, BTC is right around that level, trading at a 1% loss for the past 24 hours.

btc_price_chart_1406241
Source: CoinGecko

As seen in the chart, the price did attempt to move above $68K yesterday, but the sellers intercepted the move and prevented any further increase.

The predominant action remains rather choppy, catching many over-exposed leveraged positions and liquidating them. In fact, around $110 million worth of leveraged positions were wiped out throughout the past 24 hours alone, with BTC accounting for almost $30 million of that. This is what the liquidation heatmap looks at the time of this writing:

liquidation_heatmap
Source: CoinGlass

Altcoins Also Unable to Progress

The altcoin market is also failing to progress, with most of the cryptocurrencies from the top 100 by means of total capitalization unable to chart any gains.

heatmap_1406241
Source: Quantify Crypto

Solana is down 2.6% and currently trading below $15, while XRP fell below the critical level of $0.5 and is now down 1.5%. Polkadot, albeit down 1.4% on the day, is now testing the important $6.5 level, and if it breaks to the upside, the bulls may attempt to spark an uptrend.

Binance Coin is trading mostly flat on the day, which is more or less true for Ethereum (ETH) as well.

Meme Coin Outlook

It’s safe to say that meme coins have become an important part of the broader market in 2024. However, this week’s downturn didn’t exactly spare them either.

Here’s what their performance looks like over the past 24 hours:

  • DOGE lost 0.4%
  • SHIB is trading flat
  • PEPE is down 4,8%
  • WIF is down 3.9%
  • FLOKI lost 3.1%
  • Book of Meme (BOME) exploded by 10%

The reason behind BOME’s impressive performance is that Coinbase – the leading US-based cryptocurrency exchange – announced support for it.

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.

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Ripple (XRP) v. SEC Lawsuit Update June 14th: Company Lawyer Says $10 Million Fine is Appropriate

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TL;DR

  • Ripple contends that the SEC’s proposed $2 billion penalty is excessive, suggesting a fine of no more than $10 million.
  • The company’s CEO anticipates a resolution by summer 2024, though the complex legal process could cause delays.

Ripple’s Arguments

The legal spat between Ripple and the US Securities and Exchange Commission (SEC) has been ongoing for more than three years, recently entering its trial phase. The lawsuit resolves around the regulator’s accusations that the company and some of its executives conducted an unregistered securities offering by selling its XRP token. 

Earlier this year, the SEC sought a $2 billion penalty on the firm alleging the aforementioned violations. Ripple did not welcome the idea, with chief legal officer Stuart Alderoty arguing the fine should not exceed $10 million. 

Most recently, the company’s lawyers doubled down on the request, comparing the case with the one between the Commission and Terraform Labs. Recall that the defunct crypto firm agreed to pay a $4.47 billion fine for its fraudulent activity. The amount includes $3.6 billion in disgorgement, $466 million in prejudgment interest, and a $420 million civil penalty.

The defense said the SEC has previously agreed that civil penalties should range from 0.6% to 1.8% of the defendant’s gross revenue, claiming that Terraform Labs “fits that pattern.” As such, the attorneys concluded that an “appropriate” fine for Ripple would be no more than $10 million.

In addition, the lawyers noted that a jury in Manhattan found Terraform Labs and its co-founder Do Kwon liable on civil charges and “recklessly orchestrating one of the largest securities frauds” in US history. In contrast, they added, there are no direct allegations of fraud in the case between Ripple and the SEC.

Is the Lawsuit Nearing a Resolution?

Despite being in its trial stage, the legal battle may drag on for years due to the complexity of the process and possible delays and appeals from both parties. According to Ripple’s CEO Brad Garlinghouse, though, the resolution may occur as soon as this summer. 

“My estimation is sometime before the end of the summer. Somebody asked me about the end of August, but I pointed out that September 21 is the end of the summer,” he recently said.

Another person who believes the case may officially end in the next few months is the American lawyer Jeremy Hogan. He envisioned a $100 million settlement:

“I’m saying that the Judge will order 0 disgorgement but throws the SEC a bone and orders Ripple to pay a $100 million penalty.”

Some might view the SEC as the underdog in the lawsuit, considering the company’s three partial court wins secured throughout 2023. XRP’s price reacted positively after each triumph, meaning a decisive victory may once again cause a substantial rally. Those willing to learn more about the legal battle and its impact on Ripple’s native token, feel free to take a look at our dedicated video below:

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