It was all going so well for BlockEx.
The London-based startup had been tipped for big things, following a successful $24 million ICO, with the promise of bringing the first EU regulated token exchange to market. But after a number of setbacks over the past year, the firm now finds itself laying off staff, in a bid to remain viable.
In BlockEx’s latest annual review, executives confirmed the company is planning a further fundraising round in 2019. But after a year that saw the company fall short on a number of key deliverables, whether investors will remain loyal to the vision remains to be seen.
Brave-facing the situation, CEO Adam Leonard was quoted as saying “staff reductions” had been made to best serve the firm’s needs in the current market.
In an interview with CoinDesk, Leonard noted, “Some of it naturally as products finished and additionally to reduce burn. We are not winding down the business and hope to have some good news next week.”
Had things gone according to play, BlockEx would have launched its platform for trading securities, which would serve firms launching ICOs as well as providing a secondary market for trade in tokens.
Describing the events that had hit the company since its ICO, Leonard suggested the firm’s struggles were profound enough to be having an adverse effect on the security token industry across the European Union.
“You could say it’s setting back the security token industry in Europe,” according to Leonard.
BlockEx launched an ICO for the DAXT token, which gave holds first access to tokens that would eventually become listed on the BlockEx platform. Tokens were sold for Ethereum, coinciding with the collapse in value of ETH—a problem Leonard claims was exacerbated by their decision to enforce KYC processes, which allowed the fiat value of the funds raised to fall even further.
He said, “So, in reality, out of the £20 million raise, we were actually left with just £5.5 million of available funds for the business go-forward basis.”
To compound their problems, this also coincided with a number of firms deciding to shutter their ICOs, or defer plans to future years, leaving BlockEx with the perfect storm of collapsing crypto prices and a lack of ICOs to list, with most of those contracted to list on BlockEx deciding not to proceed with their listings.
With limited funds to work with, the firm has failed to cut through as it had hoped in 2018, with the latest round of job cuts perhaps a further sign of rubber meeting road.
BlockEx maintains that it is not winding up, and that it will release the products promised in due course. However, given the challenging conditions the firm has faced to date, and the wider malaise around ICOs, it remains to be seen whether they can make up for lost ground in 2019.
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