DX.Exchange looking for new owner, shuts down operations

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It looked like it would be the next big thing in the digital assets space, but now, DX.Exchange has halted operations and is looking for a new owner. The Estonian-based exchange confirmed that it had stopped accepting deposits and requested that its users withdraw their holdings. It’s now on the lookout for a merger or an outright buyer, with its chances of resuming operations being hinged on finding a partner.

DX.Exchange was launched in January to much fanfare, describing itself as the first platform to tokenize real world assets such as stocks to major companies including Apple, Alphabet, Tesla, Amazon, Nvidia and Facebook. It also offered cryptocurrency trading.

However, according to the exchange’s announcement, “The costs of providing the required level of security, support and technology is not economically feasible on our own.”

The exchange has been relying on Nasdaq’s matching engine on its platform, with one of the benefits being the prevention of market manipulation. It also applied Nasdaq’s financial information exchange protocol which defines and controls the exchange of electronic messages between two parties that conduct securities transactions.

And while the platform was hailed as the next big thing in the industry, especially in the era of tokenization, it hasn’t taken off as expected. And now, its future hinges on whether it will find a partner to merge with in time.

The statement read, “The board believes this is the best opportunity for DX.Exchange to achieve success for its shareholders and compete in this challenging market. In the event a merger or sell is not completed in a timely matter then the exchange may not resume operations and take appropriate action.”

The closure will only affect the deposits, but clients can still withdraw their funds. To withdraw, the client must indicate in an email the amount they hold, attach a photo of their ID and a selfie with the day’s newspaper.

The exchange has seen its fair share of controversy in its short existence. Just days after launch, it was discovered that it had a security flaw that would have allowed anyone to access its users’ authentication tokens. Later, its legitimacy came into question after it was discovered that its major shareholder had a criminal history and had played a key part in widespread binary options fraud in Israel.