London Block Exchange: A Tale of a Breakout Bitcoin Trading Platform Fighting to Stay Alive
London Block Exchange (LBX) was the product of a vision by a British millionaire who made his fortunes in the real estate business. Jonathan Sandelson along with Ben Dives longed to create a digital asset trading platform after the phenomenal rise of Bitcoin in 2017. Ben and Jonathan goes long back and beyond being business partners, where Jonathan hired Ben as his driver back in 2001. The actual idea was proposed by Ben Dive, however, Sandelson played a pivotal part in turning that vision into a reality by funding £2 million private seed round and taking away 50% of the total ownership of LBX.
LBX was launched back in November 2017 with a vision to create a crypto Visa Debit card, which promised on-shore banking and compliant oversight. The exchange got the right amount of attention at the time of launch as 10,000 flocked onto the exchange within days of its existence. The main reason for such attraction was the promise by the firm to bridge the gap between those who don't understand how crypto works but still want to be a part of the growing trend.
However, all business plans do not succeed as planned, and Dive learned it the hard way, as two of the main executives of the firm left mid-way and their aspirational crypto Visa Debit card never launched. The main reason for such a setback was a list of wrong financial decisions and a number of legal setbacks that the company suffered. The setbacks almost brought the aspirational project on the verge of extinction.
Dive had to liquidate a further 25% of his holdings in the firm as he was in dire need of injecting money into the business, and the liquidation gave Dive's vision another lease of life through £1.5 million injections.
Why Did LBX Fail Despite The Noval Planning And Investments
It is hard to balance between aspiration and reality and the same was the main cause behind LBX downfall even before it could properly launch to the masses. It all started with the first seed of funding where the turnout was just poor and that is why a majority of the funding was done by Jonathan himself. The next setback came in the form of its Crypto Visa Debit Card, the card issuer WaveCrest lost its VISA license, which led to the failure of LBX's whole vision behind setting up the exchange. LBX could not even recover half of the money that they put in for the project.
After the failure of the Crypto Visa Debit Card, the company made some bad financial decisions where it under-evaluated the expenditure which led to a cash crunch. In 2018, the exchange came across its worst nightmare when it faced compliance glitch targeted by a money laundering group, which led to the freezing of several accounts. Later the financial troubles got so intensified that even Jonathan could not help much and LBX had to rely on ICO, but that plan did not go through too.
The employees in the firm are not receiving their complete salary in the last few months and two of their important executives have also left the firm.
The Road To Revival
Dive who also work as the chief compliance officer for the LBX is not delusional and knows the difficulties of the business he has gotten himself into, both legal and financial ones. Dive says,
“Starting an exchange is either an incredibly brave or stupid thing to do,” he says. “It is a game of risk management…It’s consistently high emotions because it’s high risks and it’s money. It brings out the most extreme aspects of humanity… It’s terrifying.”
The LBX is now planning to avail Over the Counter trading services with financial services spinoff called LBX Pay. Dive believes that with over 150 clients the business is profit making and has helped the business to survive in the toughest of time. Dive being realistic due to the setbacks that he has received over the years believe that LBX Pay can turn the fortunes of his fate and the company and projects £10 million in the next 5 years, hoping for a lucrative exit strategy.
The firm is finally seeing some ray of hope as it has secured two capital packages in the form of convertible loans in the fundraising round and also hoping for a £500,000 tax rebate. Dive says he is in touch with reality and knows the challenges that might arrive in future but he is not planning to go down without a fight.