Crypto Bank FairX Shuts Down Citing Lack of Funds, Bleak Future

FairX, a crypto bank that planned to run on the Stellar network, ran out of steam.

AccessTimeIconJul 22, 2019 at 10:00 a.m. UTC
Updated Sep 13, 2021 at 11:13 a.m. UTC

In a Twitter thread so winding that it should have been a Medium post, the founder of FairX, a so-called crypto bank, announced the company was shutting down. The tweetstorm, posted on July 19, offered a complete rundown of the problems facing a modern crypto-banking solution. The biggest problem? He ran out of cash.

"Ultimately, our business model was simple: introduce a new, licensed, fully regulated national bank, modeled as a financial market utility, that would work with individuals and banks to create a dematerialized bank deposit, denominated in USD. The bank was Frank Financial," wrote the founder, former CTO of IBM Blockchain Financial Solutions Michael Dowling, apparently without irony.

Further, the Dowling noted that blockchain might not be the best solution for banking. He did, however, wish Facebook and Libra well in their effort to turn things around on the regulatory front. "I really do wish Marcus and his team all the best of luck. I wish Marcus had chosen…ANYONE…other than FB to partner with. I wish he had tried this at PayPal, which has a reputation of actually following the rules to get things done. Pretty sure they will require a bank license," he wrote.

In the end, Dowling said he and his team needed some time to regroup.

The company planned to run on the Stellar network, and was to become an "anchor" on Stellar that could take in fiat and crypto and convert them to tokens on the network, according to researcher Gitzalytics

Dowling noted that neither VCs or crypto investors liked the company. First, he was unable to give preferred shares to early investors because of banking regulations and he also could not create a proper stablecoin without centralization, a bugbear to the crypto whales. In the end, Dowling said, it cost too much fiat to disrupt the banking industry with crypto.

The upside? Visitors to the FairX website are now treated to the tiniest of smiles:


Image via Car image via Shutterstock.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Read more about