BlockEx Taken Constant Hits in 2018
The impact of the ongoing bear market is being felt across crypto-based companies around the globe.
The UK-based company BlockEx confirmed that is would be laying off its staff because of financial issues just one year after a hugely successful initial coin offering (ICO) that raised $25 million. The company’s CEO stated that this was due to the constant hits the security token issuer suffered throughout 2018.
Sticking to Policy Hurt BlockEx
When it launched its ICO, BlockEx was proud to be one of the crypto platforms to be completely compliant with European regulations. The company positioned itself as a platform where security tokens could be issued and traded, and where other trading platforms could easily enter crypto trading.
The company strictly followed the KYC/AML (Know Your Customer/Anti-Money Laundering) guidelines when issuing its native DAXT token. However, its adherence to regulations meant that investors could back out of sales, since such sales were not finalized until buyers received their DAXT tokens in exchange for ETH tokens from BlockEx.
The company had started its token sale in December of 2017, when the price of Ether was at its highest. Unfortunately, by the time the sale closed in March of 2018, the cryptocurrency’s price had plummeted. Due to this, buys who saw the price of Ether nosediving were able to opt out of the sale since they had not yet received their DAXT tokens.
While many chose to stay the course, by the time the entire KYC/AML process was completed, the tokens that were issued had lost much of their value.
According to the company’s chief executive officer Adam Leonard, out of the £20 million (~$25 million) that the ICO raised, BlockEx was left with only £5.5 million (~$7 million) to invest in the business.
Troubles Continue
BlockEx’s run of bad luck continued through 2018. After the launch, the ICOs that the company had contracted with either were killed or they postponed their token sales to 2019. Thus, the company did not have any new offerings on its platform.
The biggest blow came when an expected $8 million funding from an investor did not materialize. The company had been counting on that inflow of money to conduct a token and equity buy back.
Because of its financial troubles, BlockEx was unable to deliver on many of its promised initiatives, including developing a mobile app for its platform, setting up white-label brokerages for equity platforms and creating its BlockEx Exchange audit feature.
Despite all these setbacks, Leonard ended on a more positive note, stating that this did not mean the company was closing down its business. In fact, he was hoping to announce some good news in the coming week.