UK and Singapore-based bitcoin-only margin trading platform BTC.sx has suspended its services “until further notice”, an email sent to the company’s customers on 25th February and obtained by CoinDesk reveals.
Launched in private beta last May, BTC.sx cited the “closure” of its main exchange partner as the reason for the decision in the official correspondence, but did not name Mt. Gox specifically.
Founder and CEO Joseph Lee later confirmed to CoinDesk that the business partner in question is embattled bitcoin exchange Mt. Gox, which abruptly shut down its website on 24th February.
Even as a business partner, Lee was not given prior word about Mt. Gox’s shutdown and potential rebranding.
“We did not receive any advanced notification of their shutdown,” Lee stated.
The result was that the company was forced to stop services temporarily and inform its community of the decision.
The search for new partners
BTC.sx had traded price movements against only Mt. Gox prior to the halt in services, as Lee said just “a small handful” of exchanges could handle its volume. Lee said customers had been prompting the company to find new partners, but that Mt. Gox’s sudden service halt has escalated this process.
In terms of a business relationship, Lee indicated his company did not work closely with Mt. Gox. He said he only met with a company representative at their office two years ago, before BTC.sx was set up.
Lee went on to state that the company is in the process of trying to diversify its future risk and restart services, and further that it could have operations up and running within the next few months.
“We are in the process of integrating with other exchange partners. This was scheduled for completion in April, but that timescale will now be bought forward in light of recent events.
Spreading our counterparty risk by integrating other exchanges has been on our radar for a while.”
In its email, BTC.sx moved to calm any fears bitcoins would be lost in the suspension, confirming that “all customer balances are secure”, and that it plans to “honor any withdrawal requests”.
Furthermore, customers with open positions will have their deposits refunded in full. The company said:
“We apologise for any inconvenience caused, we are working hard to integrate new exchanges and offer our service again as soon as possible. We will keep you informed of any update, all refunds will be processed in due course, thank you for your patience during this time.”
The announcement follows the company’s announced maintenance on 21st February, when it closed to complete “technical operations”, which it claimed were successful.
And we’re trading! Maintenance complete. Thank you for your patience.
— BTC.sx (@BTCsx) February 21, 2014
At the time, BTC.sx indicated it was “one of only a few liquid ways to trade the price movement at Mt. Gox”, although trade size was limited. However, the halt of trading on Mt. Gox stopped trading entirely.
“Every position we place must have a corresponding order placed out to market. Despite the issues in recent weeks we were still able to place orders to market at MtGox up until today,” Lee said.
Notably, BTC.sx was not affected by the DDoS attacks that hampered trading on Mt. Gox, according to its official blog.
BTC.sx was originally backed by $150,000 in private capital, and was seeking additional investment. Past statements indicated that it saw its derivatives platform as a key part of building the bitcoin ecosystem.
The company used leveraged positions, meaning users effectively bet BTC against bitcoin fluctuations, which were gauged against the US dollar. The site then lent customers money to bolster their positions.
On 21st January, BTC.sx revealed that it had brokered $35m in trades, and that it had more than 3,000 active users. It had passed the $13m mark in December, suggesting trading increased markedly over the last few months.
Still, while he is disappointed in the setback the service halt inflicts on his business, Lee suggested that if Mt. Gox were to successfully rebrand, he would consider establishing new business ties with the exchange.
“I would love to work with them closer as a partner if they can resolve their outstanding issues,” he said.