If you’re a proud owner of any cryptocurrency, you must’ve wondered what happens if a crypto wallet goes out of business.

There are several types of crypto wallets – paper, hardware, and software. The first two are offline wallets, while the third is an online wallet. Offline wallets, like Trezor, are generally considered safer than online wallets.

But what if Trezor goes out of business? What will happen to your private keys and investments? Keep on reading to find out.

Reasons for Crypto Wallets Going Out of Business

Crypto wallets can get out of business for numerous reasons. Here’s a list of the most common ones:

Security Breach

Crypto wallets are often targeted by cybercriminals. The most common types of digital attacks include phishing, malicious codes, and key thefts. That said, security breaches can cause severe problems for crypto wallet providers. Besides losing their reputation and customers, they can also go out of business.

This happened to FTX, one of the most prominent crypto exchanges that was hacked in 2022. After hackers stole $600 million from their wallets, FTX declared bankruptcy.

Lack of Financial Viability

Another reason crypto wallets go out of business is the lack of financial viability. Namely, creating and managing crypto wallets can be very expensive. Crypto wallet providers will have to allocate their funds to different segments. That’s why many impose high gas fees.

That said, the success of a crypto wallet will depend on its generated revenue. If its revenue is not high enough, there is a possibility that the crypto wallet will shut down.

Lack of User Adoption

In addition to high revenue, crypto wallets must have a large user base to succeed. The more users the wallet has, the higher its revenue and popularity will be, and vice versa. A crypto wallet with a small number of users will have a hard time breaking through the competition. This may also cause financial problems as they won’t have enough funds to keep them in business.

The lack of users can be attributed to bad marketing, limited storage, and a limited number of available cryptocurrencies.

Operational Challenges

To function flawlessly, crypto wallets must be maintained through regular updates. Maintenance and update costs generally range from $10,000 to $50,000. Moreover, they must have responsive and professional customer support. That said, the most common operational challenges most wallet providers face are technical issues and poor customer support.

This can lead to the loss of users, harming their reputation. A bad reputation also means a decline in business, which can result in bankruptcy.

Outdated Technology

As you know, the crypto industry is constantly developing. To remain competitive, crypto wallet providers must follow the latest technological trends. I.e., they must offer innovative features, such as 2-factor authentication, QR code scanners, and backup and recovery. Modern crypto wallets will also provide multi-currency support and price-tracking tools.

With that in mind, using outdated technology can lead to a decrease in the number of users.

Regulatory Challenges

The last factor that could cause a wallet provider to close its business is crypto regulations. Crypto regulations are essential. Why? Because they reduce the possibility of scams and fraudulent activities. On that note, each jurisdiction will impose different regulations involving cryptocurrencies.

The task of wallet providers is to adhere to these rules. There are several types of crypto wallet regulations. However, the most common are KYC/AML compliance and data privacy.

If wallet providers fail to comply with crypto regulations, they will face legal problems, possibly leading to forced closure.

What Happens if a Crypto Wallet Goes Out of Business

If crypto wallet providers go out of business, their wallets will become inactive. This means that users won’t be able to access their private keys — they’ll lose their funds. Furthermore, since wallet providers won’t be able to maintain their software, a security breach may occur.

Likewise, users with inactive wallets won’t be able to access their transactional history or contact customer support. What’s more, if the wallet provider goes bankrupt, they may have to liquidate their assets. This means that users won’t be compensated for the losses of their investments.

Can You Recover a Crypto Wallet?

Yes. However, the recovery options will depend on your situation. For example, if the wallet provider gets closed due to illegal activities, you can file a lawsuit against them. There are also special agencies that deal with digital asset recovery. Their goal is to find and recover funds from defunct crypto wallets.

What happens if Ledger goes out of business? You won’t lose your funds. Namely, hardware wallets like Ledger and Trezor come with a 12 or 24-word backup seed that will be available only to you. Even if your wallet provider goes out of business, you’ll be able to enter this backup seed into any other crypto wallet to access your funds.


As you can see, crypto wallets can go out of business for many reasons. The best way to protect your crypto investments is to use hardware wallets and monitor your accounts regularly.

You should also keep copies of your transactions to avoid issues with tax services.

If your wallet provider goes bankrupt, seek assistance from the crypto community — talk to people who have experienced the same problem. You should also consult with legal advisors who specialize in cryptocurrencies, as they may be able to help you recover your funds.


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