HK blockchain remittance startup Bitspark shutting down

Ben Ng February 05, 2020 17:15

Hong Kong-based remittance startup Bitspark is closing operations next month, six years after its launch.Under its set-up, customer funds are converted into cryptocurrencies before they are transferred overseas, and then sold in exchange for the fiat currency in the recipient country to complete the transaction.

Users include money transfer and foreign exchange companies, mainly in the Asia-Pacific region, including Hong Kong, the Philippines, Vietnam, Indonesia and Australia.

The firm used bitcoin, the largest cryptocurrency by market cap, in the initial stage, but abandoned it and switched to BitShares in 2018. BitShares can be used to issue cryptocurrencies with the value pegged to a fiat currency.

In a blog post on Feb. 3, Bitspark co-founder and chief executive George Harrap announced that the firm will shut down on March 4 as a result of “internal restructuring that hasn't worked out, and a decision taken by shareholders internally”.

Harrap also cited the impact of the months-long protests and the Wuhan-linked coronavirus in Hong Kong as among the reasons for the firm's closure.

Bitspark clients can withdraw their funds until March 4, and via the firm's customer support for a further 90 days afterwards, he said.

Co-founder and chief operating officer Maxine Ryan tweeted that she had quit her position at Bitspark, and this “naturally caused a need to restructure the company which unfortunately landed this result”.

“While I hoped the company would continue especially due to the MOM [month on month] growth, it was determined that due to its inconstancy it wasn’t predictable enough to continue,” she wrote.

“Please do not take this as a sign of its decline as it’s stronger than ever and I cannot wait to see what its future holds,” she added.

Bitspark was once regarded as a very promising startup in the cryptocurrency space. In 2017, it launched an initial coin offering and raised US$1.3 million worth of cryptocurrency for its Zephyr (ZEPH) reward crypto-tokens. The ZEPH tokens were to be used as transaction fees for its cross-border cryptocurrency payment services.

In March last year, Bitspark launched a stablecoin called Sparkdex.HKD, which was pegged to HK$1 to minimize price volatility.

It also opened its first cash point, which allowed consumers to buy and sell cryptocurrencies using cash, at the Cali-Mex restaurant in Sheung Wan in October last year. It said its product saw a 400 percent month-on-month growth as a result.

In an interview with EJ Insight last year, Harrap said its Hong Kong dollar-backed stablecoin was aimed at facilitating the process of on- and off-ramps for assets moving from traditional financial markets into the crypto space, thereby overcoming what many see as a huge hurdle to the widespread adoption of cryptocurrency.

He also touted the benefits of its stablecoin, saying it enabled the firm to offer remittance and other financial services to the unbanked population, particularly in developing countries.

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Ben Ng

EJ Insight writer