The crypto winter just got a bit colder.
Cryptocurrency exchange Kraken said it had decided to cease its operations in Japan and deregister from the country’s regulatory agency as of Jan. 31.
The company said the move reflects “current market conditions” in the country as well as a weak global crypto market.
“The decision is part of Kraken’s efforts to prioritize resources and investments in those areas that align with our strategy and will best position Kraken for long-term success,” the company said in a statement Wednesday.
Kraken will stop all deposit functionality from accounts on Jan. 9 while leaving trading functionality operational so users can convert their balances to the assets of their choice.
This will be the second time Kraken has closed its Japanese operations after doing so in 2018. It relaunched in the country in 2020 after securing registration from regulators, CNBC reported.
Kraken is one of the world’s largest crypto exchanges, with trading volumes of $408.9 million per day.
Bitcoin was down slightly in trading Wednesday, trading around $16,600 at last check. For the year, the world’s most prominent cryptocurrency is down 65% after starting 2022 near $48,000.
Crypto Winter Spreads Further
This has been a disastrous year for cryptocurrencies. Market conditions that have hampered equity markets as well as crypto-specific issues have weighed on the industry.
The biggest business news story of the year has been the fall of crypto exchange FTX and its former chief executive, Sam Bankman-Fried.
A couple of weeks ago the U.S. Attorney’s Office in Manhattan and the U.S. Securities and Exchange Commission unveiled charges against Bankman-Fried for what they alleged was a scheme to defraud investors in FTX.
According to Chainalysis, the downfall has caused $9 billion of losses for FTX clients, but this number doesn’t take into account potential losses for people who deposited their funds with the exchange. The likelihood of these investors recovering them is unclear.
2022, the Year of Crypto Bankruptcies
The fledgling financial-services industry powered by blockchain technology has been rocked by an avalanche of major corporate bankruptcies. These failures have come right alongside the cryptocurrency market’s loss of nearly $2.2 trillion from its record $3 trillion reached in November 2021.
It all started on May 9, when sister cryptocurrencies Luna and UST, or TerraUSD, collapsed. The two tokens crashed after UST lost its peg to the dollar, the foundation qualifying it as a stablecoin. Such cryptocurrencies are tied to more stable assets, like the U.S. dollar or gold.
From May 9 to May 13, at least $55 billion of market cap disappeared, causing many investors to sustain colossal losses.
The depegging of Terra’s UST coin and the collapse of Celsius and 3AC a few weeks later drove massive losses for investors: $20.5 billion in the case of UST and $33 billion in the case of Celsius and 3AC, according to blockchain security firm Chainalysis.
This crisis mainly revealed the links and exposure of crypto firms to each other, like the banks during the financial crisis of 2008. The other lesson was the lack of transparency of centralized crypto companies, which are mostly unregulated.
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Source: https://www.thestreet.com/investing/cryptocurrency/crypto-winter-gets-colder-as-kraken-closes-japanese-operations?puc=yahoo&cm_ven=YAHOO&yptr=yahoo