In a surprising turn of events, blockchain-based financial services provider, Unbanked, today announced its decision to wind down operations. The company, established in 2018 with the ambition to bridge the gap between the blockchain and traditional financial systems, cites regulatory hurdles and difficulties in raising capital as the main reasons behind this unfortunate decision.
This update comes just 25 days after their most recent raise and only eight months after raising $2.2 million from retail investors on Republic.
Unbanked’s unique value proposition allowed for the seamless integration of blockchain technology with traditional banking infrastructure, including bank accounts and debit cards. This innovative approach gave customers greater control over their money, while offering lower fees and convenience, demonstrating the benefits of a “best of both worlds” scenario.
Despite initial skepticism about the integration of blockchain into traditional banking networks, Unbanked has proven its critics wrong. The company successfully supported more than 25 companies across various countries and served hundreds of thousands of users, reshaping the crypto landscape over the last five years.
However, Unbanked’s commitment to operating within the confines of stringent U.S. regulation has proven more challenging than anticipated. The company believed its on-shore operations in the U.S., coupled with proactive engagement with regulators, would offer a long-term advantage over other crypto companies that chose to bypass U.S. regulations by operating off-shore.
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Unfortunately, this strategy resulted in significant wasted time and excessive costs. Unbanked bluntly stated that U.S. regulators are making concerted efforts to hinder companies, including banks and fintechs, from supporting crypto assets, even when they are trying to comply with regulations. This regulatory pushback has severely hampered Unbanked’s ability to raise capital and sustain its operations.
Unbanked primarily relied on bootstrapping and operational revenue for growth, rather than significant institutional funding. The company raised $4 million over the past five years from approximately 6,000 investors through various crowdfunding campaigns. These investors, mainly individuals who see blockchain as the future and U.S. companies operating in a regulated framework as the best investment option, will be the ones most affected by Unbanked’s shutdown.
Adding to the frustration, Unbanked recently signed a term sheet for a $5 million investment at a $20 million valuation. However, these funds have not yet been received. If this funding does materialize, Unbanked has stated that it would resume operations and look stronger than ever.
Unbanked has urged all customers and partners to begin withdrawing all funds (crypto and USD) as soon as possible. The company has assured its users that all customer funds have been kept separate from its business operations and will maintain this integrity throughout the wind-down period.
Despite the difficulties, Unbanked’s team remains committed to its mission and optimistic about the future. They hope that, one day, they may revive Unbanked or another better-funded company will continue their core mission.
While the decision to wind down Unbanked was not made lightly, the company acknowledges that they have exhausted all options and commends its team for their relentless efforts and dedication over the past five years. Unbanked extends its gratitude to all its supporters for their understanding during these challenging times.
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