Koinex started in India in the summer of 2017 and quickly built a big cryptocurrency exchange, reaching a peak in December 2017. During that time, the platform recorded a staggering 246 Million dollars in trading volume and added as much as 45,000 new users during a timespan of only 24 hours!
The idea was to bring the world of cryptocurrencies to India. The platform let users trade Bitcoin, Ethereum, Bitcoin Cash, Ripple and many other well-known cryptocurrencies on a peer to peer basis.
Users could enjoy the benefits of transparent pricing for each currency so that buyers could place bids and sellers could place ‘asks’. Koinex also offered a highly secure wallet where users could store their money.
Koinex also had raised a secretly kept amount of funding from foreign investors.
On April 6th, 2018, the Reserve Bank of India issued a statement where it said that all government-regulated exchange platforms had to stop trading with and exit relationships with any individual or organization that dealt with cryptocurrency transactions and block such transactions from taking place.
Koinex took the case to court and, to this very day, has a writ pending in the Supreme Court of India, but things move slow and there hasn’t been any progress in the case so far.
The statement meant that all banks in India were forbidden to deal with cryptocurrencies, so users of the platform now faced a daunting task: how would they even get their money if they couldn’t deposit and withdraw it from their own bank?
As the CEO of Koinex, Rahul Raj stated himself on a blog post on Medium; “The last 14 months have been tough to operate a digital assets trading business in India, on account of the closure of bank accounts holding user deposits.”
To force law-abiding users to have to deal with transactions that their own government is waging a war on is difficult. It meant that Koinex had to find other solutions so that their users could get their money’s worth.
And while there were other payment platforms that worked, Koinex suffered from a constant stream of obstacles like payment denials, closure of bank accounts and disruptions of operations. A very important point to make here is that this also happened for non-crypto transactions such as salary payments, rent, and purchase of equipment.
In other words, just because Koinex was associated with cryptocurrency exchanges, many of their employees got a call from their bank every month, where they were presented with a new problem related to payment and their bank accounts because they worked for Koinex.
Ultimately, there were too many obstacles and too little profit to be made from exchanging cryptocurrency in India. Nobody literally made anything anymore and the Indian Government clearly wanted cryptocurrency out of the way. What simply was left for Koinex to do, was to shut their doors.