An investigation into popular Canadian crypto bourse Einstein exchange has shown that the platform is missing about $16 million in customer funds. This revelation comes days after the B.C. Securities Commission (BCSC) seized the exchange following a litany of complaints from aggrieved users.
News of the current trouble for yet another Canadian crypto exchange presents further troubles for the country’s cryptocurrency trading scene. QuadrigaCX, another erstwhile major crypto exchange in Canada has also been navigating its own bankruptcy issue with more than $190 million missing from its coffers.
$16 Million Missing from Einstein Crypto Exchange
According to Global News, Einstein, which was under receivership with Grant Thornton Limited only has $45,000 in assets. This discovery comes after a “limited review” of the platform’s books.
Of the $45,000, $30,000 is in cash while the remaining $15,000 is in cryptocurrencies. Grant Thornton says it has sent notices to several banks where Einstein reportedly maintains accounts to see if the exchange still has other assets. Grant Thornton also seized stock belonging to senior executives of the exchange as part of efforts to recover the missing funds.
As previously reported by Blockonomi, the BCSC shut down the crypto exchange earlier in November 2019 after numerous complaints from aggrieved customers. Some users who complained on Reddit back in October 2019 were warned by Einstein to stop requesting for their funds or risk getting their accounts terminated.
Reports indicate that the platform owes users more than $16 million — a figure representatives of the exchange say is incorrect as their estimation stands between $8 million and $10 million.
Victim of Fraud or Attempted Exit Scam?
Michael Ongun Gokturk, director of Einstein crypto exchange is yet to comment on the matter. The platform did, however, try to provide a reason for dire nature of its current financial standing, declaring:
“This deficit stems for a series of credit card and bank draft frauds that the Einstein Group suffered, and that the majority of this loss is made up of cryptocurrency assets.”
Einstein, a major crypto exchange in Canada before this debacle serviced more than 200,000 customers across the globe. According to Grant Thornton, about 300 customers have submitted claims on the missing funds.
In anticipation of the coming storm, Einstein reportedly tried to sell itself to an unnamed U.S.-based firm. The deal ultimately fell through amid rumors that the crypto exchange might attempt an exit scam. However, before being shut down by the BCSC, Einstein maintained that it held enough funds to satisfy customer withdrawal requests.
According to details gleaned from a court order, Grant Thornton has been discharged as a receiver for the embattled crypto exchange. The BCSC is reportedly still conducting investigations into the events that led to the platform’s current financial situation.
Another Calamity for Canada’s Crypto Scene
The situation with Einstein is yet another negative news story coming out of the Canadian crypto exchange scene. The QuadrigaCX saga which began in late 2018 is still ongoing with bankruptcy court proceedings now moved from Halifax, Nova Scotia to Toronto.
QuadrigaCX reportedly owes $190 million with the platform losing access to its cold wallet following the passing of its CEO Gerald Cotten. In the wake of these high-profile crypto cases, financial regulators have begun taking steps to create tougher laws to govern the Canadian cryptocurrency scene.
Outside Canada, other crypto exchanges have also been forced to shut down their operations. In New Zealand, Cryptopia was unable to recover from a January hack while smaller platforms in South Korea are shutting up shop due to increasingly harsher government regulations.
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