Indian cryptocurrency exchange Koinex has permanently shut down its digital asset trading business, becoming another casualty of the country’s prolonged banking restrictions on crypto firms. CEO Rahul Raj said the company decided to end all exchange operations after months of uncertainty and disruption. Trading services were disabled at 2:00 PM IST on June 27, 2019, with all open orders automatically canceled and funds returned to the relevant wallets.
Koinex said its wallet service would remain available for a limited period, but users were required to withdraw all funds by July 15. The company warned that failure to do so could put user balances at risk if it became unable to keep wallet functions active beyond that date. It also said a snapshot of wallet balances would be taken for recordkeeping, while INR withdrawals would begin immediately. Over the following five weeks, the exchange planned to return user deposits to registered bank accounts, charging a convenience fee ranging from INR 10 to INR 2,000 depending on wallet balances.
Banking Access Collapse Hit Core Operations
Koinex directly blamed the shutdown on the Reserve Bank of India’s restrictions on banking services for crypto-related businesses. Raj said the exchange had spent the last 14 months dealing with payment gateway refusals, bank account closures, and blocked transactions tied to digital asset trading. According to him, the pressure extended beyond crypto activity itself: even routine payments such as salaries, rent, and equipment purchases were questioned by banks because of the company’s links to a digital asset exchange.
The company added that bank accounts holding user funds were still frozen, forcing it to arrange INR payouts using its own resources. Koinex described that move as voluntary rather than a legal obligation. Although the RBI circular had been challenged in India’s Supreme Court, there had been no practical relief for exchanges by the time Koinex exited the market.
Regulatory Fears Weighed on Trading Volumes
Beyond the banking freeze, Koinex said uncertainty over India’s crypto rules severely damaged market confidence. A regulatory framework drafted by an interministerial committee was reportedly ready for submission to the finance minister, but its contents had not been officially released. At the same time, local media reports pointed to a proposed law titled the “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019”, with claims that some crypto-related activities could face harsh penalties. While those reports were unconfirmed, Raj said the headlines created enough fear, uncertainty, and doubt to trigger a sharp decline in trading volumes on the platform.
Koinex launched on August 25, 2017. The company said it recorded $265 million in trading volume within four months of launch and once added more than 40,000 new users in a single day at peak market conditions. Its website claimed more than 1 million registered users and over $3 billion in executed orders. With Koinex’s closure, it became the fourth Indian crypto exchange to shut down under the RBI-linked banking squeeze, following Zebpay, Coindelta, and Coinome. Attention now turns to the Supreme Court proceedings and whether the government will formally clarify its crypto regulatory stance.