It seems that the noose is tightening on dodgy crypto exchanges around the globe who try to compete in this hyper evolving industry. The latest victim to find themselves choking out is the Crypto asset trading platform Einstein Exchange.
On Monday, The British Columbia Securities Commission (BCSC) announced it had filed to take control of the Einstein crypto exchange and that the operations would be shuttered within 90 days. Once again, a too little, too late approach. Unfortunately, the clients of Einstein are now left in limbo by the fact they are owed $12.4 million USD. Even before the BCSC had filed to take control, customers of Einstein had been waiting months to withdraw funds and were constantly informed by Einstein staff that there was a backlog in processing. When BCSC investigators visited the Vancouver offices of Einstein they found they were locked, and their phone numbers were no longer operational.
The BCSC order was granted by The Supreme Court of British Columbia who have appointed Grant Thornton as the interim receiver who took control of the exchange’s assets on 1 November 2019. In the application to the Supreme Court, it stated that the BCSC has received multiple complaints from clients of Einstein that had not been able to access their accounts or funds. Einstein claims that they needed to shut down due to non-profitability and were attempting to sell the assets to another organization.
Take Caution with Crypto Exchanges
Einstein was originally incorporate back in December 2017 by the sole director, Michael Ongun Gokturk. The BCSC has apparently been investigating the company since May 2019 over possible money laundering activities as well as improper use of client funds. It’s also noted that no crypto asset trading platforms have been authorized by the BCSC to operate as an exchange. The BCSC issued a statement with the Canadian securities regulators that again urges Canadians to take caution when trading any crypto assets due to the risks and potential losses.
In a virtual world where most clients never even get to physically see the offices of a crypto exchange, Einstein allowed clients to come and make deposits and withdrawals at their Vancouver offices. For many investors this gave them a level of trust, however its evident more than ever that even if you can visit the exchange’s offices, it doesn’t guarantee that everything is above board or trustworthy. Various customers of Einstein that have been communicating on Facebook and Reddit are considering filing a class action suit.
Proper Due Diligence Pays
It seems like Einstein is just another “here today, gone tomorrow” crypto exchange that will join the rubbish heap along with another notable collapse of QuadrigaCX earlier this year that has resulted in customers being out of pocket close to $200 million. Once again these events highlight the need for traders to due proper due diligence before depositing their hard earned cash with an exchange and to report suspicious activities as soon as they happen.