Late Tuesday morning, decentralized cryptocurrency exchange IDEX announced that they would be blocking users with New York IP addresses from using its platform. Citing regulatory compliance as the reason for the ban, IDEX’s new policy goes into effect today at 2 pm EST (6 pm UTC).
IDEX Says Goodbye to New York Traders
In what came as a shocking development to the crypto-community, IDEX, the leading decentralized exchange from Aurora Labs, has announced that it would block trades ordered from all New York IP addresses. The announcement was made earlier on Wednesday through a tweet on the official handle of Aurora, the parent company.
The tweet said, “***Notice: #IDEX will begin blocking new orders from users with New York State IP addresses on Thursday, October 25th (6pm UTC). Cancels and withdrawals will remain active.”
***Notice: #IDEX will begin blocking new orders from users with New York State IP addresses on Thursday, October 25th (6pm UTC). Cancels and withdrawals will remain active.
— IDEX 🐐 (@idexio) October 24, 2018
What caused the shock within the community is the fact that IDEX claims to be a decentralized exchange and is expected to maintain anonymity and should not be holding identifying information about its users.
The platform, which lists ERC20 tokens, is the top decentralized exchange in terms of trading volumes, the number of users and the number of transactions.
The Company Explains its Actions
Explaining the reason for the ban to online publication u.today, the firm is reported to have said, “BitLicense regulation that has been in place since 2014. IDEX is not compliant with the BitLicense and cannot offer services to NY users.”
A BbitLicense is a business license that companies dealing in virtual currencies need to obtain from the New York State Department of Financial Services (NYSDFS). The regulation applies to firms based in the New York area as well as services provided to residents of New York remotely.
When Twitter users called IDEX out on its decision, the exchange defended its position, stating:
Nearly all current DEX's have centralized aspects, and immunity to government intervention is in no way guaranteed.
— IDEX 🐐 (@idexio) October 24, 2018
IDEX’s whitepaper describes the exchange as, “a hybrid, semi-decentralized exchange that provides a trustless, real-time, high-throughput trading experience in conjunction with Blockchain based settlement.”
It appears that the only significant difference between centralized exchanges and so-called decentralized ones is that the latter do not hold the customer’s assets and users need to plug-in their wallets before placing orders.
The Crypto Community Reacts
Not surprisingly, the crypto community is less than pleased with the news. On Twitter especially, many users are lambasting IDEX over describing itself as a decentralized exchange, while others are doubting the viability of a truly decentralized exchange altogether.
It would be nice if you will remove the word "Decentralized" from your exchange description. Thank YOU. #CentralizedExchange #IDEX #Hypocrites
— Rocky (@EnCryptoSign) October 24, 2018
It's not decentralized when they restrict people from trading. Idex has never been fully decentralized since they require you to deposit tokens instead of trading directly from your wallet.
— BATMAN ⚡ (@CryptosBatman) October 24, 2018
What are your thoughts on this announcement by IDEX? Let us know in the comments below.
Images courtesy of Shutterstock, Twitter
