Skip to main content

Intersango Shuts Down USD Trade

Op-ed - Intersango Shuts Down USD Trade

This morning, users of the Bitcoin exchange Intersango were greeted with an email from support stating that Intersango would soon be shutting down all USD-denominated trade on the exchange:

Intersango’s USD market will stop trading 2012-10-14 at approximately midnight UTC.

At this time we ask that persons with USD funds either place a withdrawal request or purchase bitcoins.

To facilitate persons wishing to purchase bitcoins Intersango has placed 625 BTC up for sale at 12.1 USD.

Unfortunately the USD market is simply too small to justify it’s ongoing operation.

The justification makes sense; while Intersango’s GBP and EUR exchanges traded 15,000 and 28,000 BTC in the past month, respectively, its USD trade has only seen a volume of 4,800 BTC, or $58,000, over the same period[1]. With its fee of 0.65%, this amounts to a monthly revenue of $400. Intersango is still seventh in the USD market, and there are many exchanges in both the USD and other currencies that are willing to continue operating at much lower volume (including Intersango itself with a Polish division handling 2,000 BTC per month), but in the case of the USD the team behind Intersango evidently does not consider maintaining operations at such volumes to be worth it.

All four Intersango exchanges, with the exception of its minor PLN division, have been in trouble for months. The EUR volume, making up the bulk of Intersango trade, peaked at about 15,000 BTC per week in July before beginning a steady decline to a third of this value now. The GBP volume never even peaked; it had been roughly steady for eight months starting from last December, but precipitously declined from an average of 15,000 BTC per week to 3,000 BTC per week in the past one and a half months. And the USD volume has simply been on a slow and steady decline from 4,000 BTC per week to 1,000 BTC per week since June.

Intersango has suffered a number of setbacks in that time. One major blow was to its reputation, as the team behind Intersango was also a key player in the prolonged Bitcoinica debacle that took place three to six months ago. Another issue was banking problems; Intersango’s UK bank, Metro Bank, halted the exchange’s ability to send and receive payments in July, leading to weeks of delays[2]. Finally, the exchange’s problems may have been largely simply a result of dropping BTC exchange activity in general. Since the closing of Bitcoin Savings and Trust on August 17, the volume of Bitcoin exchange activity on most exchanges, including the dominant player MtGox, has reduced significantly[3]from the levels that the exchanges saw in the summer.

A successful Bitcoin conference in London in September did improve the Intersango team’s reputation, and banking problems of Bitcoin exchanges do tend to eventually be fixed, so Intersango does have a chance to turn itself around. However, the question is, will it? Is Intersango’s move to abandon the USD part of a strategic consolidation and retreat, or does it mean that the exchange is sinking into the depths of obscurity? Or will its trading volume simply stabilize at a level that is perhaps not as glamorous as that of MtGox, but is nevertheless profitable to run? At this point, only time will tell.