By CCN: Amsterdam-based cryptocurrency exchange Blockport has declared bankruptcy after its security token offering (STO) flamed out in disastrous fashion.
Blockport launched a token sale between April 16 and May 15, in which the crypto exchange sought to raise €5 million ($5.62 million). But it didn’t work out as planned.
Crypto Exchange Token Crashes 93% After STO Announcement
The Blockport cryptocurrency crashed 93 percent. It hasn’t exactly been a great investment. | Source: CoinMarketCap
In a blog post last month, Blockport Founder and Chief of Product Sebastiaan Lichter announced that the project’s STO failed to reach the minimum threshold of €1 million ($1.13 million). In the same announcement, Lichter stated that all token sale participants would receive refunds for their investments.
According to the founder, Blockport would not issue new BPT tokens due to the unfortunate results of the STO.
“Since our first equity fundraising (STO) round was unsuccessful, we can’t uphold our planned growth trajectory and therefore have to significantly scale down our operations and team,” Lichter told Hard Fork.
Soon after the announcement, Blockport’s native token BPT crashed hard. The price of the token fell from $0.094 down to $0.0063 accumulating a loss of 93 percent in less than ten hours.
What Went Wrong?
Blockport’s fruitless STO could come as a surprise to the cryptocurrency community due to two reasons.
First, the cryptocurrency exchange had an ICO in January 2018, in which the project raised $15 million. Considering the successful ICO results, it’s a great surprise that the exchange couldn’t even reach the €1 million softcap in its STO.
Also, STOs are trending fundraising methods in the cryptocurrency space as tokens come with additional benefits. With a minimum investment of €500, contributors of the Blockport STO would get a share of the crypto exchange’s profits as well as access to the company’s annual board and management team meetings.
It seems like cryptocurrency users weren’t interested enough in these benefits, or they didn’t find the project alluring enough.
“There are multiple internal and external factors that have played a role during our fundraise that had their effect on the overall sentiment and performance of the STO. Summing up, we think that it’s fair to say that the market has spoken, and we now have to deal with the undesired result,” Lichter stated.
Blockport’s Not-So-Bright Future
STOs are all the rage, but that doesn’t mean companies are having an easy time riding them all the way to the bank. | Source: Shutterstock
Blockport filed for and declared bankruptcy shortly after the STO announcement. With this in mind, the future of the cryptocurrency exchange doesn’t look too promising.
“As a responsible but unfortunate measure, we have decided to drastically scale down our operations and development. Running our operations and platform as-is without a substantial investment is currently not an economically viable and responsible option,” Lichter said.
The founder also announced that the Blockport platform would shut down by the end of May as the project’s core team will make developments in “stealth mode.” Lichter’s goal is to expand Blockport with unique and “value-adding” features to attract more investors when the exchange restarts in the future.
Lichter told HardFork that Blockport is already in talks with “several parties for a potential relaunch.” The company stated that it would publish a further update in the third quarter of this year.
