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The End of Commex: The Problem and Solution
Uruba Niazi

VP of Marketing - Content

26 Mar 2024
2 min read
0 comments

The announcement of CommEX closing its exchange is the symptom of an old problem that has haunted DeFi from the start. Users lose the control over their funds and become unprotected in the financial market. What is this old reason and what can solve it?

CommEX: The Problem

CommEX, short for "Community Exchange," entered the crypto scene in 2023 with the acquisition of Binance’s Russian business on September 27, 2023. The acquisition came after Binance planned to exit the Russian market fully due to Western sanctions against Russia. This also coincides with the ongoing investigation into a case filed by the SEC in the US against Binance in June 2023 for the sale of unregistered securities and operations illegally in the US. The acquisition by CommEX was done promptly with the gradual sunsetting and migration of Binance’s holdings to CommEX.

As regulatory scrutiny intensified, CommEX struggled to address mounting concerns and provide satisfactory explanations to its users. Last week, the exchange announced its closure, citing mounting legal challenges and dwindling user confidence. In a statement on its website, the exchange cited "unforeseen regulatory hurdles" and "financial constraints" as the primary reasons for its decision.

Per the suspension roadmap, CommEx will cease futures trading services on March 28 and commence the suspension of peer-to-peer exchange activities on April 2. By April 23, CommEx intends to close down its spot trading platform fully and suspend its website operations by May 10. The announcement notes that “User accounts that retain assets after May 10, 2024, will be subject to an asset management fee of 1% of assets.” This means that not only will users lose access to their funds if they do not act within this timeline, but they will incur more fees on their own money.

This announcement has already caused a mass exodus, and users have seen long delays and high fees for retrieving their funds. The backlog of transactions and the exchange's almost total lack of accountability leave the crypto community feeling insecure and cheated by DeFi Solutions as a whole.

Constraints

The pitfall that seems to engulf exchanges is the constraints of a decentralized solution’s operating structure, which starts with security, asset custody, regulations, scalability, and user experience.

​​Decentralized systems are not immune to security vulnerabilities. The distributed nature of these solutions can sometimes exacerbate security risks. Smart contract vulnerabilities, consensus protocol attacks, and governance exploits are security challenges facing decentralized platforms. Users lose control and ownership when they send their funds to an exchange. If the exchange shuts its doors or has a breach, it cannot guarantee your funds will be returned. Decentralized platforms can be challenging due to complex onboarding processes, slower transaction times, and other usability issues. Finding a balance between the benefits of decentralization and a seamless user experience remains a significant challenge for many projects.

All these ailments sound a lot like the problems of traditional banking. The kind of problems that cryptocurrency was built to solve. So how does this qualify as an improvement? And why shouldn’t users abandon such projects that fail to deliver on these promises?

The CrossFi Solution

Cross Finance offers a unique solution for DeFi users. It starts with a Layer 1 blockchain, a modular architecture consisting of Cosmos Tendermint and Ethereum Virtual Machine, which work together to power interoperability, scalability, and functionality. The apps and dApps built on the CrossFi Chain are lightning-fast and immune to market fluctuations or high volume of users. Most importantly, our solutions integrate directly with your non-custodial wallet like a MetaMask, so you never lose control over your assets. Our apps and a physical card will directly link to a non-custodial wallet and always charge a flat fee for every transaction. CrossFi has compliant KYC and onboarding processes, making it easy for users to use all our cross-border services.

“Cross Finance is a financial instrument available to every user. Only the user can manage, control, and dispose of his funds. In Cross Finance, users' assets will never be blocked or withdrawn from users.”

Alexander Mamasidikov

CEO, Chief ideologist & coordinator of the team

Moving Forward

While CommEX's closure may have left many with a bitter taste, it also serves as an opportunity for reflection and improvement within the crypto community. More than ever, genuinely decentralized solutions backed by robust technology like the CrossFi Chain and dApps are needed—solutions that can pass regulatory scrutiny while providing trusted and fast services to users.

In conclusion, the rise and fall of CommEX underscore the inherent challenges and risks associated with the cryptocurrency market. It's a stark reminder that success in this space depends on ethical conduct, regulatory adherence, and unwavering commitment to user protection. As the industry evolves, lessons must be learned, mistakes must be acknowledged, and measures must be taken to ensure a safer and more resilient ecosystem.

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