How crypto exchange ZebPay revived from shutdown to land 4M users, $1B in monthly transactions

When crypto exchange Zebpay was launched in 2012, the founders knew crypto was a risky affair. But they didn’t envision just how much their boat would be rocked.

Sandeep Goenka, Saurabh Agrawal, and Mahin Gupta started ZebPay as BuySellBitco.in, until the name was changed in 2014. Allowing users to trade in cryptocurrency, the exchange grew into one of India’s largest.

But just four years later, in 2018, it was shut down.

Avinash Shekhar, Co-CEO, ZebPay, who had joined the crypto exchange as CFO in 2017, says in a video interaction:

“We knew the Reserve Bank of India (RBI) was not favourable towards crypto, and many banks were also not supportive about working with us. But we didn’t see the ban coming. Nevertheless, the RBI in 2018 said outright that Indian banks will not support crypto exchanges and crypto transactions.”

Singapore-headquartered ZebPay and other crypto exchanges were given three months to close bank accounts, and by September 2018, ZebPay returned the deposited money to its users.

As it shut shop, ZebPay released a statement which read, “The recent past has been extremely difficult. The curb on bank accounts has crippled our and our customer’s ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business.”

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Surviving a crypto winter

While it was easy to dissolve the business and venture into other avenues, ZebPay did not give up. Behind the closed shutters, it stayed alive, waiting for an opportunity to bounce back in India.

Between 2018 and 2020, the firm bided its time by working on keeping existing customer accounts secure, adding multi-signature wallet infrastructure, exploring business in Malta, Australia, Singapore, etc.

But by December 2019, the founders felt even this was not working. It was perhaps time to evaluate other options or shut ZebPay completely, they felt.

Rahul Pagidipati, who had been a silent partner, then bought out the majority of the firm, with the founders no longer involved in day-to-day operations.

“The new management felt we needed to weather the difficult times as we were convinced Bitcoin and other cryptos were the future - perhaps a bigger disruptor than even the Internet. There were always going to be small and large roadblocks along the way. But those who were left standing would win,” Avinash says.

Their intuition was right. As 2020 began, there came a fresh ray of hope, which crypto entrepreneurs hoped would put an end to the crypto winter of the previous two years. And this ray of hope came in the form of the Supreme Court.

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Revival of the crypto market

In March 2020, the Supreme Court struck down the RBI’s ban, which it deemed “unconstitutional” - paving the way for the return of crypto trading in India. And with it, the revival of the hopes and aspirations of Indian blockchain and crypto entrepreneurs.

A crypto trading boom ensued. From March to September last year, the number of trading customers on ZebPay reportedly grew by almost four times, with average monthly increase pegged at 24 percent.

India - like other emerging markets - saw an uptake of investments in crypto, with investors flocking to the virtual tokens as a new and exciting asset class.

In fact, India was ranked second in the world in terms of global crypto adoption in 2021, according to a report by blockchain data platform Chainalysis.

In the past year, ZebPay has grown into one of the largest crypto exchange platforms in the country, with over four million users and over $1 billion in monthly transaction volumes.

“Transaction volumes over 16 months have gone up over 25 times. What we used to do in a month, we now do in a day,” says Avinash.

ZebPay is headquartered in Singapore, but Avinash says that is just a formality, as most of its operations occur in India. “We have a legal entity in India, investments go into it, and we pay taxes in India, and most of the team is here,” he explains.

A competitive landscape

It was not an entirely smooth return to the limelight for ZebPay. It reopened its shutters within two days of the Supreme Court verdict, and took a few months to get its act back together.

And this time, Avinash and the team weren’t alone. The likes of WazirX, CoinDCX, CoinSwitch Kuber, BuyUCoin, and other crypto exchanges were all making hay, and rapidly onboarding lakhs of customers.

“Compared to 2017, there has been a lot of competition since last year. Now, even customer expectations are significantly higher. We have no choice but to innovate and grow, so we’re trying to manage expectations and work on our systems, processes, automation, etc., simultaneously,” he says.

Like most other exchanges, transaction fees are the core source of revenue for ZebPay, and will continue to be the major contributor for the years to come.

ZebPay is also exploring crypto lending and borrowing features, where users can earn interest on their crypto assets. Avinash expects lending to become bigger and add another revenue stream to ZebPay’s business model.

Building the future for India’s crypto market

There remains work to be done for India’s crypto industry to maximise its potential. The ecosystem currently awaits regulatory clarity from the government. The government is reportedly planning to define crypto and compartmentalise virtual currencies on the basis of their use cases.

Earlier, it was thought the inter-ministerial panel on cryptocurrency under the Chairmanship of Secretary (Economic Affairs) had recommended that all private cryptocurrencies, except any virtual currencies issued by the state, will be prohibited in India.

As such, it remains to be seen whether crypto will be legalised or not.

Avinash says, “There have been numerous voices to regulate this industry rather than ban it. Crypto can create billion dollar companies out of India and boost the nation’s growth. This will also help the government recover more tax. Now, we wait and see if India will participate in the change or sit on the fence.”

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