CoinEx, a prominent crypto exchange, has announced that it will be shutting down after nine years of operation. The exchange cited shrinking revenue and rising compliance costs as the primary reasons for its closure. Founder Haipo Yang stated that CoinEx had failed to become one of the industry’s leading exchanges, leading to security and compliance obligations that were no longer sustainable given the revenue being generated.
The centralized crypto platform revealed that it will be winding down operations in stages, with spot trading scheduled to end on Sept. 29 and withdrawals closing on Dec. 22. New registrations have been halted, and various products such as margin trading, loans, Earn, and staking are being phased out. This decision comes in the wake of a prolonged contraction in crypto trading volume and liquidity, as well as increasing regulatory requirements in major jurisdictions.
In 2023, CoinEx faced legal action from the New York Attorney General’s office for operating without registering as a securities and commodities broker-dealer. As part of the settlement, CoinEx agreed to withdraw its platform and services from the US, refunding over $1.1 million to New York investors and paying more than $600,000 in penalties.
CoinEx’s closure is part of a larger trend in the crypto exchange industry, with other platforms like BitMEX and AscendEX also announcing their shutdowns. These exits are attributed to a combination of regulatory expenses, security risks, and the increasing concentration of trading volume among the largest exchanges.
Despite an overall rebound in trading activity, the largest exchanges like Binance, OKX, MEXC, Bybit, and Gate continue to dominate the market, capturing a significant share of trading volume. This concentration presents challenges for smaller exchanges like CoinEx, which struggle to compete with the scale and resources of their larger counterparts.
As CoinEx prepares to wind down its operations, there is approximately $253.6 million sitting in CoinEx-labeled wallets. Bitcoin accounts for over half of this total, with other assets like Aave, USDT, and ETH making up the remainder. The exchange has assured customers that their assets are fully backed and has urged them to withdraw their funds before the Dec. 22 deadline to avoid any congestion or delays.
The closure of CoinEx will have ripple effects on the crypto market, as traders, market makers, and token projects will need to find alternative venues for their activities. This redistribution of liquidity will further consolidate trading volume among the top exchanges, highlighting the challenges faced by smaller platforms in the industry.