Companies most affected by the fall of the cryptocurrency market
The main cryptocurrency Bitcoin in 2018 lost more than 80% of its value. And the cryptocurrency market, which is tightly tied to the Bitcoin exchange rate, could not help but react in the same way. But the fall of Bitcoin negatively affected not only other cryptocurrencies, but also traders, holders, miners and cryptocurrencies. The latter were forced to reduce staff and seriously cut budgets, and some completely stopped their activities.
And then, in the fourth quarter of 2017, the growth in the rate of major cryptocurrencies caused euphoria among many investors. Even those who previously did not show any interest in the cryptocurrency market succumbed to a wave of general enthusiasm. The explosive growth of interest in the crypto has led many companies to try to play on this trend and not unsuccessfully - a huge number of hedge funds have appeared that are designed to facilitate the entry of traditional investors into the cryptocurrency market. The number of such companies grew at such a rate that in January 2018 this attracted the attention of the U.S. Securities and Exchange Commission (SEC). The regulator warned that he is closely monitoring companies that have changed their names and business models in order to take advantage of this growing interest in cryptocurrencies and blockchain. At the same time, the SEC began to reject requests for the creation of funds of this type because of regulatory loopholes. In March, the SEC sent inquiries to cryptocurrency hedge funds for information on methods for evaluating investments in cryptocurrencies and compliance with the requirements of the rules for protecting clients' funds. The regulator expressed concern that investors are pouring billions of dollars into cryptocurrency assets without an adequate risk assessment and that some people who profit from an overheated market may violate the law. In this situation, according to the SEC, it is necessary to conduct a detailed audit of the activities of all crypto companies with a view to compliance with the current legislation. Since by this time the Bitcoin exchange rate was already about $ 7 thousand (the lowest since November 2017), many investment funds simply stopped their activities, including the Alpha Protocol and the Crowd Crypto Fund.
Genesis Mining - an Icelandic mining company, in August 2018 began to close unprofitable mining contracts. Due to the depreciation of bitcoin that began in January, some cloud mining contracts began to bring less profit than the cost of their maintenance, so the company was forced to offer users to switch to five-year premium contracts without the possibility of premature termination - or cancel them. To minimize negative consequences for customers, the company's management made the transition to the Radiant Bitcoin Mining tariff with a discount of $ 180 to $ 250 for 1 TH / s. It is important to note that the actions of Genesis Mining can be described as sparing, since the cloud mining business is not an area that can guarantee permanent profit to its customers. Recall that due to a similar problem, mining company Hashflare also announced the suspension of mining equipment and contracts SHA-256. The Japanese company GMO Internet, which was about to launch a cloud mining service in August 2018, revised its business priorities and decided to concentrate on selling ASIC miners, and pay less attention to its own mining and cryptocurrency mining services for consumers.
Coinfloor is Britain's oldest bitcoin exchange, was founded in 2013 and is aimed at institutional investors. It has also been hit hard by the effects of the general cryptocurrency market crash last year. As a result of the reduction in trading on the site, the company's management was forced to restructure the company and seriously reduce staff. According to the CEO of the exchange, Obi Nwosu, over the past 12 months, the total volume of BTC trading on the site amounted to $ 1 billion, however, to date, according to CoinMarketCap, the daily trading volume on Coinfloor is a little more than $ 400 thousand.
Giga Watt, one of the largest US mining companies, formerly known as MegaBigPower, was founded in 2017 in Washington. In the summer of this year, the company conducted an ICO, as a result of which investors invested more than $ 20 million in the project. In exchange for their contribution, they should have received either Giga Watt tokens, which give exclusive rights to use the company's facilities for free for 50 years, or mining equipment, which should have been installed and run by the project team. However, on November 20, 2018, the Giga Watt filed for bankruptcy by filing an appropriate petition with the Eastern District Federal District Court of Washington. At the same time, the company with assets up to $ 50 thousand remained owed to creditors from $ 10 to $ 50 million. In addition to the fall of the cryptocurrency market, the company was very negatively affected by two class action lawsuits filed against it in January and March 2018.