Unbanked, a crypto fintech firm that provides crypto custody and payments services, is the latest to close shop, citing a harsh regulatory environment for crypto in the United States.
Unbanked cofounders Ian Kane and Daniel Gouldman stated in a May 26 blog post that when the company opened, they believed that building the company in the United States “would be the smart long-term play,” but that was not 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,” the executives explained.
This decision, instead, resulted in “a lot of wasted time and excessive costs,” they added.
“To put it bluntly, US regulators are actively attempting to prevent companies (banks and fintech) from supporting crypto assets – even when the companies are attempting to do so correctly and in accordance with the law.” Unbanked’s decision to cease operations comes despite recently striking major agreements with other companies, including a partnership with payments giant Mastercard.
The co-founders stated that the firm was expecting $5 million in funding, but it has yet to materialize. According to Kane and Gouldman, this is due to the regulatory environment for crypto in the United States, which “ultimately limited the Unbanked’s ability to raise capital and run a self-sustaining business.”
“Three weeks ago, Unbanked signed a term sheet for a $5 million investment at a $20 million valuation, allowing us to not only continue but also expand operations.” “As of now, we have not received those funds,” the company explained. The company has advised its customers to withdraw all funds “as soon as possible.” Unbanked has not been alone in its predicament.
BottlePay, a Bitcoin $26,382 Lightning Network payments firm, also closed its doors on May 23, with all services being completely shut down by June 24, 2023. It did not explain the closure. Just a day before, cryptocurrency exchange HotBit announced that it, too, would be closing down, urging all of its customers to withdraw their funds as soon as possible.
While it acknowledged that the demise of FTX and the temporary depreciation of USD Coin (USDC) significantly impacted its operations, Hotbit claimed that the primary cause of the deterioration was a former team member who became the subject of an investigation in August 2022. According to the exchange, the investigation forced it to close its doors for several weeks.
Teressa, a fractional-ownership NFT platform, closed its doors permanently on May 12, claiming that its company structure and financial situation would prevent it from continuing operations.
Tesera’s co-founder, Andy Chorlian, said in a now-deleted tweet that the company had made the “incredibly difficult decision” to shut down all operations over the next few weeks.