Indian Crypto Exchange Zebpay Closes Its Doors
Indian cryptocurrency exchange Zebpay stopped offering trading services earlier today, September 28th. The firm cited difficulties related to a decision taken earlier this year by India’s central bank barring all financial institutions in the country from providing services to businesses dealing with cryptocurrencies.
Subscribe to the Bitsonline YouTube channel for great videos featuring industry insiders & experts
Banking Difficulties Behind the Stoppage
Zebpay, which was one of the country’s most popular and widely used cryptocurrency exchanges, made the trading halt official as of 16:00 local Indian time on September 28th. In a blog post, the firm explained the rationale behind its decision:
“The curb on bank accounts has crippled our, and our customer’s, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business. As a result, we are stopping our exchange activities.”
The Zebpay wallet is still functioning, according to the firm, and all crypto-to-crypto orders that were unexecuted at the deadline were cancelled and credited back to accounts.
Meanwhile, it appears that at least some other Indian crypto exchanges are intending to remain open. Bitbns is seeing Zebpay’s demise as an opportunity, and has offered to refund withdrawal fees paid to Zebpay by customers who move their coins and tokens to Bitbns. Though no other exchanges have announced closures at press time, it seems that other Indian exchanges will remain under pressure as long as the RBI’s ban remains in place.
Indian Crypto Crackdown Long Time Coming
The news about Zebpay comes nearly six months after the Reserve Bank of India (RBI), India’s central bank, barred all regulated financial institutions in the country from providing services to any firm dealing with cryptocurrencies. The RBI gave financial institutions three months to cease these kinds of operations.
After the announcement of the ban, Zebpay attempted to continue business as usual, adding support for coins like EOS and adding crypto-to-crypto trading. However, the ban did lead to some problems for the exchange. In June, there was a flash crash on the exchange after the firm notified its clients that rupee deposits and withdrawals had been frozen. Prices of bitcoin and ether crashed by around 15 percent each in the wake of the announcement.
At the same time, multiple petitions were filed by the crypto industry challenging the RBI’s decision and the Supreme Court of India decided that it would hear the cases together. In July, the Court upheld the ban, which took effect July 6th. Later in the month, it announced it would hear further challenges in September, though the ban remained in place. After some delay, those arguments were supposed to have been held on September 26th, though the outcome of them has not yet been reported.
In India, Crypto Trading Continues Though Scams Remain an Issue
In August, Bitsonline reported that Indians had continued trading crypto despite the ban through an illegal method called “dabba trading.” Under this practice, Indians place orders with local brokers, who then settle the trades on foreign exchanges on behalf of their clients.
The multiple fraudulent schemes linked to cryptocurrencies in India in recent times undoubtedly added to the negative perception of them by authorities. One entrepreneur, Amit Bhardwaj, allegedly defrauded investors of more than $300 million USD before being arrested in April of this year. The same month, two other Indians were arrested for running a bitcoin-based multi-level marketing (MLM) scheme.
Have your say. What impact will the closure of Zebpay have in India? Are other Indian crypto exchanges at risk of closing soon?
Images via Pixabay, Supreme Court of India