THE EXCHANGE COINFLEX IS ANOTHER VICTIM OF THE CRYPTO WINTER

In recent months we have seen how a group of companies whose economic activity is closely related to the exchange of cryptocurrencies has begun to decline. You can further explore the site altcoin side kick to learn more.

All this is due to the constant decline that digital currencies have had, and the effects have been collective; nobody expected that their financing level could be affected in such a way.

Mass layoffs, freezing of accounts, and suspension of withdrawals are some measures that have characterized the closure of all these companies, including Coinbase, Buenbit, Gemini, and crypto.com.

However, there have been cases where bankruptcy has been the safest option for these crypto assets, including Celsius, BitPanda, Compass Mining, and Voyager.

It seems to be the domino effect at the level of crypto companies we are observing right now, in which the crypto winter could be about to end or extend for a few more months.

A tough time now for Coinflex

Coinflex is a recognized cryptocurrency exchange platform, which has been operating since 2019, considered one of the ideal applications for all those new to crypto investments.

It is located in Seychelles and is characterized by its fast verification process. The most significant operations were based on the BNB / USD currency pair.

With a considerable position in the cryptocurrency market, this exchange platform could not avoid the fact that the downtrend wiped out its liquidity.

The fall occurred after it was pressured to suspend withdrawals by its users; consequently, the digital currencies continued to fall, and the greatest fear of its users was to lose their investments completely. Excessive sales began to be made, implying a lack of liquidity to respond to all its clients.

On the other hand, there is also the fact that the massive layoffs were not only registered in the largest cryptocurrency trading companies, but Coinflex was already following in the footsteps of these companies.

The personnel reductions were around 60%, more than half of their staff. They assumed that the rest of the personnel would only be based on the centralized operations and the technology that is supposedly the company’s backbone.

Although they tried to increase their trading volumes, they could not handle the situation anymore, significantly affecting investors worldwide whose economic activities were based on cryptocurrency trading.

The uncertainty and crisis of the digital currency ecosystem led this well-known platform to decide to file for bankruptcy in the hope of recovering as long as the digital financial market allows it.

Why did they go bankrupt?

Each case has been different. Still, they have a common factor: digital currencies have had to go through a bear market in 2022.

A set of elements could be standard among companies whose functions ceased in the face of a highly convulsed market.

The first and possibly considered essential aspect is that many of these platforms migrate capital to other sources to multiply said capital by obtaining other returns such as loans to third parties.

Some of these exchange platforms were dragged down by the Collapse caused by Terra and Anchor, as well as the loans to 3AC, one of the companies that went bankrupt after the resounding fall suffered by the Terra cryptocurrency.

To all this is added the concern of users knowing the financial situation concerning their liquidity, in this case of Coinflex, generating massive withdrawals from their wallets on the platform to protect what little was left after a downward trend that does not stop.

Expectations for exchange platforms

The bear market remains on the lookout; a specific scenario cannot yet be established about a change in trend that could improve the general context of the crypto market.

The fall of Bitcoin and the entire ecosystem is linked to the fall of traditional market shares and macroeconomic factors such as inflation, the possible return of the pandemic, and the geopolitical situation between Russia and Ukraine.

The diversification of the returns offered by the exchange platforms could be considered a crucial aspect in terms of the profitability and stability of these cryptocurrency exchange companies.

Conclusion

It is possible that the commercial bases of these platforms will not be modified in the face of an economic and financial scenario that is quite vulnerable. Still, everything depends on the weather and the possible improvements in the general economic environment.

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