Gatecoin, a Hong Kong-based cryptocurrency exchange, was forced to liquidate by an unspecified court on March 13 after a string of problems running the exchange.
The first major incident was a hack in May, 2016 that resulted in the company losing 15 per cent of its crypto-assets (worth around US$2 million at the time). The team suspects the company’s hot wallet (which means connected to the internet) was hacked via a server reboot.
After the hack, Gatecoin struggled to navigate its relationship with the banking industry and turned to a payment service provider (PSP) to help facilitate the transaction process.
It is at this point where Gatecoin appears to blame the PSP provider for its shuttering. In their closing announcement, the company wrote,
“However, that PSP failed to process most of the transfers in a timely manner which in turn almost paralyzed our operation for many months and caused substantial loss on our side.”
Gatecoin replaced the original PSP with another provider, but claims it did not help because the first company still controlled a chunk of the funds.
At this point, Gatecoin said it could no longer finance its operations and was ordered to liquidate by the court system. The company has been assigned a provisional liquidator who will oversee the re-distribution of Gatecoin assets to their creditors.
The collapse of Gatecoin is the end of a company that claimed to be the world’s first exchange to allow people to buy and sell Ethereum.