Einstein Exchange, a Vancouver-based cryptocurrency exchange, shut down this week, owing more than $16 million to its clients, including about $11 million in cryptocurrencies and about $5 million in cash, according to CBC News.
“We received a number of complaints from customers of the exchange being unable to access their assets.”
– Peter Brady, BCSC
Prior to the shutdown, the British Columbia Securities Commission (BCSC) had received “numerous complaints” about the exchange’s customers being unable to access their assets on the platform.
On October 31, the BCSC had been told by a lawyer representing Einstein Exchange that it planned to shut down within 30 to 60 days due to a lack of profit. After applying to the BC Supreme Court on November 1, the BCSC received an order to appoint an “interim receiver” to oversee the assets of the Einstein Exchange.
In the commission’s petition to the court filed November 1, CBC News reported the BCSC said it was not able to reach the exchange’s founder Michael Ongun Gokturk. BCSC executive director Peter Brady told CBC News the BCSC has also informed the RCMP of potential money laundering concerns that were brought to the commission by a former Einstein Exchange employee.
“We received a number of complaints from customers of the exchange being unable to access their assets. We had sent some requests for information to the exchange twice and we didn’t get an answer,” Brady said to CBC News. “We were then talking to the company’s counsel and learned that the exchange intended to shut down within 30 to 60 days due to a lack of profit and subsequently that legal counsel stepped down, so that raised concerns for us.”
“The BCSC has not authorized any crypto-asset trading platforms to operate as an exchange,” the BCSC said in a statement. “The BCSC, along with other Canadian securities regulators, continues to urge Canadians to exercise caution when buying or selling any crypto-assets due to various risks, including the loss of some or all of their investment.”
RELATED: Blockchain company Vanbex Labs sells products to Hyperion amid legal strife
Accounting firm Grant Thornton was subsequently appointed to take control of Einstein Exchange’s assets. When an investigator visited the exchange’s Vancouver office, he found the offices were locked, and none of the exchange’s phone numbers were working. The exchange’s website is also currently down. The BCSC claims the exchange’s lawyers refused to specify where the firm’s assets were located, and one investigator stated in an affidavit obtained by CBC News, that he believes the firm “improperly used” its customers’ money.
CBC News also reported that one Einstein Exchange customer, Scott Nelson, filed a lawsuit against the platform recently, claiming he put about $480,000 USD in bitcoin on the platform and that the company blamed technical issues when he tried to withdraw.
At the beginning of 2018, Gokturk told CBC News the exchange had been receiving a “storm of online criticism” when it first opened, with customers claiming slow response times and expressing fears they might lose their money.
RELATED: How can Canada prevent another QuadrigaCX?
The Einstein Exchange is the second Canadian crypto exchange to shutter this year, it follows the collapse of another BC-founded crypto exchange, QuadrigaCX. Toward the end of last year, the company’s CEO passed away while abroad, and about $250 million of the firm’s assets were completely inaccessible.
Einstein Exchange’s Facebook page is currently still active, with the last post from the company dating back to October 3, where the company advises users to “be mindful” when sharing personal information.
“Please note that we have been receiving many complaints that scammers have been targeting Einstein customers who have posted their account emails publicly via social media,” the company wrote.
Comments underneath the post accuse Einstein Exchange of not following through with withdrawals, and not responding to clients.
“Everyone needs to take a stand and speak out against this unethical and unlawful exchange,” wrote one commenter.
Image courtesy Unsplash
