Crypto fintech firm Unbanked, which provides crypto custody and payments services, has become the latest firm to close shop while citing a harsh regulatory environment for crypto in the United States.
In a May 26 blog post Unbanked cofounders Ian Kane and Daniel Gouldman said that when it first opened, it believed that building the company in the United States “would be the smart long-term play” though that did not turn out to be the case five years later.
“While other crypto companies grew rapidly off-shore by avoiding strict regulation, we believed that engaging with regulators and following their arduous processes would ultimately position Unbanked to come out ahead,” said the execs.
Today, we are making the unfortunate decision to wind down Unbanked.— Unbanked (@UnbankedHQ) May 25, 2023
Please withdraw your funds (crypto + USD) as soon as possible from your accounts.
More details are available here: https://t.co/oWR7m3ZqlM
Instead, this decision led to “a lot of wasted time and excessive costs,” they added.
To state it bluntly, US regulators are actively trying to stop companies (banks and fintechs) from supporting crypto assets – even when the companies are trying to do it correctly and by the book.
Unbanked’s decision to wind down operations comes despite the firm inking major deals with other companies in recent months, including a partnership with payments giant Mastercard.
The co-founders said the firm had been expecting $5 million in funding injection, but that still hasn't materialized. Kane and Gouldman said they believe this is a result of the regulatory climate for crypto in the U.S. which “ultimately limited Unbanked’s ability to raise capital and run a self-sustaining business.”
“Three weeks ago Unbanked signed a term sheet for an investment of $5 million dollars at a $20 million valuation that would allow us to not only continue operations but to expand. We have not received those funds as of this moment,” the firm explained.
The firm has urged its clients to begin the withdrawal of all funds “as soon as possible.”
Cointelegraph contacted Unbanked for comment but is yet to receive a response.
Crypto firms feel the chill
Unbanked hasn’t been alone in its plight.
On May 23, a Bitcoin (BTC $26,428) Lightning Network payments firm dubbed BottlePay also closed its doors, with all services being completely shut down by June 24, 2023. It did not provide a reason for the closure.
Just a day earlier, crypto exchange HotBit announced that it too would be winding down, urging all of its customers to withdraw funds from the platform as soon as possible.
While it noted that the collapse of FTX and the temporary depeg of USD Coin (USDC) had significant effects on its operations, Hotbit claimed the primary driver of the deterioration came from a former team member who became the subject of an investigation in August 2022. According to the exchange, the probe forced it to stop its business for weeks.
On May 12, a fractional-ownership NFT platform called Teressa also closed its doors for good, claiming that its company structure and financial situation would prevent it from continuing operations.
In a now-deleted tweet, Tesera’s co-founder, Andy Chorlian said that it had made the “incredibly hard decision” to wind down all of its operations over the next few weeks.
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