- bitFlyer, a Tokyo-based crypto exchange, reported a loss of 750 million yen for the 2019 financial year.
- According to the company's annual report, the deficit is attributable to weaker-than-expected sales and return on investment.
- The massive drop in bitcoin in the second half of 2019 and strict local regulations further maximized bitFlyer's losses.
The Japanese crypto exchange bitFlyer lost around 750 million yen (~ 6.9 million US dollars) in 2019 last annual report.
The Tokyo-based crypto trading company announced that its revenue for the year was $ 49.33 million. However, the closure in mid-2018 resulted in a dramatic drop in sales and return on investment, while operating costs were around $ 8.5 million.
The losses followed a series of events that prevented bitFlyer from realizing its full potential. It started with the Financial Services Agency's review of the exchange in mid-2018. The agency identified issues in its security and compliance system and added that the exchange could not prevent money laundering and hackers from gaining access to users' crypto accounts .
One official even noticed that one of the dealers had registered with bitFlyer at a mailing address.
A long hold
In its response, the exchange announced that it would stop accepting new companies. New accounts only opened after July 2, 2019 – when Bitcoin was trading 225 percent higher in a year.
Still, income started to deteriorate after Bitcoin dropped from its high of $ 14,000 to below $ 6,500 in the second half of 2019. The low prices led to lower trading volumes. In the meantime, an additional check prevented the exchange from offering above-average margin trading services – it reduced leverage from 15x to 4x.
Local crypto news source CoinPost.jp further noted An increase in bitFlyer's cash outflow between 2018 and 2019. Traders looking for overfunded alternatives moved their capital out of the Japanese stock exchange – a move that benefited its unregulated competitors like BitMEX enormously.
bitFlyer Eyeing Recovery
After experiencing headwind after headwind, bitFlyer began to normalize its business by adding new regulated assets to its trading platform and adding it to the FSA's good books.
In December 2019, the company Ripples XRP was listed on its stock exchange. Another popular crypto was added four months later, the Basic Attention Token. As of May, bitFlyer was also one of the few Japanese crypto exchanges whose advertising was broadcast on national television.
Given the increasing acceptance of Bitcoin in the face of the ongoing financial crisis, the exchange could experience a comeback due to the increased regional demand for crypto tokens.