Closed Down Bitcoin Exchanges

In this article we will give you an overview of some of the bigger and well-known Bitcoin and Cryptocurrency exchanges that went under since the beginning of Bitcoin trading in 2010. The list of closed down bitcoin exchanges is not exhaustive. For sure we missed some of the more obscure local exchanges. Our list shows those exchange that a large group of people used. These exchanges all had somewhat of a good reputation. Should you believe we are missing some important exchanges, we would be happy to hear from you. Please contact us and we will update our information.

Natural Selection

In any financial industry, whether it be banking or trading, insolvency is a possibility. As a result of it, companies close down.. It is the laws of nature, applied to the financial world. Only the strongest survive. As an industry grows and matures, there will be natural selection. There will be those who were clever enough to prepare for the future and those who did not.

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It is important to note that people lose money when exchanges are forced to close down. However, this “natural selection” does secure long-term success of cryptocurrency. When exchanges shut down as for malpractice, we all demand that the next place we trade cryptocurrencies will be better. And there have been some exchanges that were forced to shut down over this. Being it a to lack of funds, hacks or just poor management. The industry as a whole benefits. Due to the tighter control, it becomes a lot more difficult for companies who want to take the easy road to money, or even scam their way to it.

So have a look at our list below and find out more why certain exchanges “had” to close down. And all for the better in our honest opinion.

More importantly for you, as you are probably getting started with cryptocurrency, are success-stories such as Binance. These have been operating for years and are lauded for their high-tech security and large offering of cryptocurrency.

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In your search for a suitable exchange, note the importance of feeling comfortable and secured. Both the larger, as well as smaller exchanges offer their unique advantages though. It partly depends on your risk/reward situation, as you can likely gain higher rewards when “trading” on smaller sites. However there might also be a bigger risk of losing your funds.


List of Crypto Exchanges That Went Belly Up

The following Bitcoin and other cryptocurrency exchange closed down in recent years.


What Happened?

We will not go into detail why these exchanges collapsed. However we will provide you a general overview of what has happened in the industry. Considering that especially in the early days, this industry dealt with a currency that was booming in value, it also got the worst out in people. And some of them became greedy, made stupid and irresponsible decisions that affected many others. All in an effort to try and boost their short-term profits.

Poor Management

The most common reason why an exchange had to close down was simply (extremely) poor management. While it can mean a ton of things, it usually meant bad decision making on how to run the exchange. For example charging either too high a fee or too low a fee. And as a result of this not assuring the proper security for customers, which then lead to customers ending their business and trading elsewhere.

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Hacking

Another issue in those early days was “hacking”. Exchanges did not do a good enough job at securing their funds properly. This resulted to large amounts of Bitcoins and other cryptocurrencies being stolen from users that traded on those exchanges.. Hacks are currently not commonplace and it is generally safe to say that the larger exchanges have made security a top priority. The entire business-model of an exchange relies on transactions and for this trust is a non-negotiable. Nonetheless hacks do still pose a threat. As a customer or trader you should always take extensive security measures yourself. To protect your “private keys” and hence to protect your coins.

Theft

A last “obvious” reason that made exchanges go bust was because of theft by the owners. As Bitcoin and other cryptocurrencies value was exploding in its earlier years, some (unregulated) exchanges simply did not let individuals withdraw their balance in their preferred currency. As the owners had already spent or sold their Bitcoin elsewhere. Now, it is important to say that this was all happening 5-10 years ago, where prosecution charges were not likely to be filed against you. Nonetheless, do make sure that the exchange you trade on is regulated by financial laws.