The official reason for the closure is stricter EU rules which they can't or won't comply with, but it has been in semi exit scam mode since shortly after they lost Paypal support.
They were originally an exchange for the Second Life currency Linden Dollar (SLL), but in 2015 they were shut out from Second Life. This effectively made the SLL currency on Virwox worthless except for what others on Virwox were willing to pay for it, and the value of SLL crashed. The actual SLL was always on Virwox's account, so they could now sell it for the full price on the Second Life exchange while owing their users nothing.
Virwox started buying back SLL before the value crashed enough that their users lost all confidence, but in the years after that they let the price slip slowly. Since this spring that price slip has accelerated, and you now have to pay about 320 SLL for 1 USD on Virwox even though the owners of Virwox sold the same SLL for 250-270 SLL per 1 USD. The difference can be pocketed by the owners.
This is not the only shady way they have made extra profit. They have also done a hefty amount of front running. If the price difference between the seller and the buyer was sufficiently large, they would take up to 80% of a transaction for themselves. This meant that if you put up an order to buy SLL for the amount of USD 100 at a fixed price and someone sold $100 worth of SLL at market price, then only 20% of your order would be fulfilled. The rest of the SLL would be bought by Virwox so they could sell it back at a higher price to other customers using the same method or normal orders. This would be invisible for both the buyer and the seller unless you paid attention to the order depth and checked the transaction log.