Crypto Bots In Trouble – Shrimpy Calls It Quits

Six years after its debut (which is an eternity in crypto years), US based bot trading company Shrimpy has advised users in an email that it will be terminating the business, with its last day of operations being set for July the 7th. Shrimpy, known for its AI-powered trading bots, has been a prominent player in the cryptocurrency trading scene.

The company says its platform and website will continue to operate until that time and it advises customers to complete any trades and download any data they require from their accounts as after the 7th the Shrimpy website will be taken down.

Although it claimed to have almost 100,000 customers who made over $14bn worth of trades on its connected exchanges, Shrimpy says the current market conditions are simply not sustainable.

“Over the last few months, the crypto market has continued to pummel small companies like ourselves. The demand from retail investors has continued to decline, while the outlook for the industry has not improved” – Shrimpy letter to users

The company says any questions from account holders can be directed to [email protected].

So what’s the problem?

While it’s currently best practice for any failing crypto business to point the finger at the FTX collapse, in this case it’s a call out that would be justified (although to be fair Shrimpy doesn’t do that directly).

The issue for all crypto exchanges and exchange adjacent businesses like Shrimpy, is that the collapse of FTX and the carnage that followed has meant people are pulling their crypto off exchanges. Whereas once many users were comfortable storing large amounts of crypto in their exchange wallets, nowadays they’re wary of another exchange failure and lost funds – so they’ve moved to self custody instead.

This is a problem for Crypto Trading Bot companies, as to a great extent their business model depends on their users trusting the centralized exchanges to store their crypto safely. Crypto bots don’t work on DeFi exchanges, so for bot traders to profit, they have to hold large sums on centralized exchanges which they can move quickly as profit opportunities appear. With users now taking their funds off exchanges, they can’t bot trade anymore, as for the most part, the bots depend on the funds being on the exchange to trade instantly. To quote Shrimpy directly “The demand from retail investors has continued to decline.”

The good news relating to the Shrimpy closure is that no user funds should be lost. Crypto bots aren’t themselves custodial, so the failure of a crypto bot company should not mean that user funds go down with it.