Nasdaq-listed cryptocurrency mining firm Riot Blockchain is exiting the crypto exchange business. The company announced that it will be ceasing development of its digital assets exchange RiotX to focus solely on crypto mining. It also announced a strategic partnership with financial services firm XMS Capital and an expansion of its crypto mining facilities.
The company has been developing the U.S.-focused exchange since early 2018, aiming to focus on the retail traders. However, it has encountered a number of challenges, it revealed in a press release. They include the evolving U.S. crypto regulatory environment, a challenge that has continued to force out several crypto businesses. Poloniex was one of the casualties, ceasing support for U.S. clients after its spinoff from Circle. Others such as Bittrex have barred U.S. clients from trading several cryptos fearing regulatory backlash.
Riot cited other challenges as well, including the cybersecurity risks involved in running an exchange as well as the intense competition in the crypto exchange business. It added, “Riot is considering opportunities to divest the limited assets associated with the RiotX in the best interest of the Company and its stockholders.”
The company revealed that it had recently completed a full network upgrade of its Oklahoma City mining facility, targeting increased performance and efficiency. It had installed 4,000 S17 miners from Bitmain at the facility, giving it a hashrate of 240 petahash per second.
Riot has also partnered with Chicago-based financial services firm XMS Capital Partners to evaluate strategic growth opportunities. XMS will help the company gain a better understanding of the dynamic crypto industry and advise it on strategic acquisitions and mergers.
Riot Blockchain has been quite controversial in the past. Originally a biotech company known as Bioptix, it changed its name in 2017 at the height of the crypto hype. This shift to crypto gave it overnight success, with the stock shooting from $8 to $40. Naturally, the SEC was curious and launched an investigation, later filing a lawsuit against the company. Riot recently saw the legal battle with the SEC come to an end.
In 2018, the company was also involved in a pump and dump scandal that led to its CEO John O’Rourke being kicked out. The SEC alleged that the company had been at center of a scam that generated over $27 million while leaving several investors holding worthless stock.
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