Within a short period of time, the crypto industry witnessed a series of companies collapse, in addition to a prolonged bear market move. Following this, the crypto ecosystem is also facing regulatory wrath amid the recently increased market volatility. For the same reason, leading market participants are leaving regions with more regulatory oversight. However, given the rise in negative sentiment, the community is speculating on exit scam rumors.
Global crypto payment gateway, CoinPayments, also joined the exit queue. The platform recently announced via private emails that it was ceasing its operations in the US and advised users to withdraw funds before July 19.
In an effort to explain the move, CoinPayments blamed the United States’ updated anti-money laundering (AML) regulations and consistent market changes for the sudden shutdown.
CoinPayments spokesperson told Bleeping Computer — “Unfortunately, due to recent AML regulations and changes, we are no longer able to provide services to the United States,” adding that “the [U.S.-based accounts have] are flagged and will be closed on the date stated in the email they recently received”. However, consumer confidence is leaning towards exit spam speculation.
Exit Scams and Rug Pulls
Simplistic, an exit scam happens when established or new businesses disappear with investors’ money by falsely claiming they have lost access to funds or goods due to hacking, government seizure, or smitten with new regulations or other issues. In such scenarios, companies claim that they cannot refund the users and end up abandoning the project.
Exit scams can be closely compared to carpet pulls in the NFT arena given their similarities. Rug pulls usually happen when crypto projects are launched with a comprehensive long-term roadmap, promising high returns to members.
These projects are gaining immense popularity with the support of the community members and claiming bluechip status for themselves. However, once the project accumulates a significant amount of funds and credibility in the market, the founders of the NFT project suddenly abandon the project.