EQONEX leaves “crowded crypto exchange space” amid crypto winter

Rick Steves

“The recent extreme market volatility and declining trading volumes have added to the headwinds being felt by exchange operators. We take a realistic view that our exchange will not move the needle for us financially over the near-to-medium term.”

Digital asset trading specialist EQONEX has announced it will be focusing resources Asset Management and Custody, meaning it “will proactively exit the crowded crypto exchange space by closing the Exchange”.

Asset management and custody are the businesses that offer the most potential for revenue growth and long-term financial sustainability for the firm, which has had a hard time since late 2021, resulting in the firing of the last chief executive, Richard Byworth, and plans for a merger or takeover.

Now, EQONEX is doubling down on tightening costs as closing the exchange is believed to improve the company’s financial position by materially reducing the high-cost structure associated with operating the Exchange, and free up resources to drive growth in the segments where it has significant competitive strengths.

The market is now comprised of nearly 300 spot exchanges, many of which share comparable features. This has resulted in intense competition and low margins, combined with the significant technological load required to ensure optimal performance. EQONEX hasn’t been able to respond to the challenge, especially in the ‘crypto winter’ which saw volumes falling.

Jonathan Farnell, CEO at EQONEX, said: “We are focused on opportunities that will drive revenue growth and position us for long-term success. Closing the Exchange will significantly simplify our business, narrow our focus, free up resources, and allow us to operate as a more efficient organization with capacity to aggressively go after market segments that offer the most potential.”

“The recent extreme market volatility and declining trading volumes have added to the headwinds being felt by exchange operators. We take a realistic view that our exchange will not move the needle for us financially over the near-to-medium term. We don’t see value in continuing to bear the costs of operating an exchange during what may be a prolonged market downturn. We have conviction that proactively exiting the crowded exchange space is the right decision to deliver shareholder value”, Farnell continued.

“Our Asset Management and Custody business, Digivault, have already made solid progress with the additional resources that we have allocated to them recently, and we are bullish about their prospects as we become an organization focused on these high-potential business areas”.

Asset management and custody businesses thrive

EQONEX Chairman Chi-Won Yoon said: “Nimble and resilient companies can adapt and evolve to navigate market conditions and exploit opportunities. We are now firmly committed to the areas where we have the expertise and experience to serve a growing customer segment, and where we can ultimately deliver the most investor value.”

“Digital asset custody and asset management businesses have high barriers to entry given their unique security, technology and regulatory specifications. We have already laid solid foundations for our businesses to thrive, and with increased focus and resources, we are well positioned to harness our competitive advantages and capitalize on market opportunities.”

EQONEX boasts a strong Asset Management business, which encompasses Investment Products (BaFin authorized for ETP issuance) and Bletchley Park, a fund of crypto hedge funds.

The Custody business, Digivault, is one of only a few digital asset custody providers to be registered with the Financial Conduct Authority in the United Kingdom and has plans to secure licenses with the Monetary Authority of Singapore and the Gibraltar Financial Services Commission.

EQONEX exchange closes

The firm announced customers will have enough time to trade out of existing derivative positions and withdraw assets from the exchange before it ceases operations.

The Exchange will close for trading at 08.00 AM UTC on 22 August 2022. Clients should aim to close out their derivative trading positions during this seven-day window.Customers will then have between 15 August and 8.00 AM UTC on 14 September (30 days from this announcement) to withdraw their assets into another wallet. Withdrawal fees will be waived.
The EQO token, being an exchange-only token that cannot be withdrawn, will cease trading with immediate effect. EQONEX will communicate with holders directly regarding their EQO balance.

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