Bitcoin Exchange Gatecoin Shuts Down Due to Financial Difficulty

Bitcoin Exchange Gatecoin Shuts Down Due to Financial Difficulty


Gatecoin, a Hong Kong-based bitcoin exchange has recently revealed that it will be shutting down its operation, citing financial difficulty. Since the exchange suffered a major hack in 2016, which saw about $2 million being moved from its wallets, the exchange hasn’t gained its footing.

The Hack is Not the Problem

As regards its shutdown, Gatecoin is pointing accusing fingers at a registered French payment service provider for paralyzing its operations. The payment company allegedly duped the exchange out of an unspecified amount of money in unsettled transfers.

Confirming the shutdown, the exchange stated on its website that:
“We have suffered financial difficulty over a period time to an extent that we are no longer able to support our operation, ” “The court on Wednesday granted a winding-up order against our company. A provisional liquidator has been appointed and we have to cease operation with immediate effect,” it added.

French Payment Service

Gatecoin which was founded in 2013, was focused entirely on bitcoin, ethereum, and ethereum-based token markets. In 2016, the exchange reported that it had lost 185,000 ETH and 250 BTC of investor funds to hackers, worth a combined $2.14 million at the time. The funds were never recovered. But the hack has not been the cause of Gatecoin shutting shop. Instead, an unnamed French payment service provider was accused by the exchange as the cause of its financial problems.

The exchange explained that:
Following our issues with our banking partners in September last year, we started working with a payment service provider (PSP) which is a fully regulated payment institution by the French regulator. However, that PSP failed to process most of the transfers in a timely manner which in turn almost paralyzed our operation for many months and caused a substantial loss on our side.

Gatecoin eventually replaced the payments company in September, helping to mitigate losses, but by that point, it was too late. The situation never really improved after that, mainly because the former PSP retained a large number of Gatecoin’s funds.