The Canadian cryptocurrency exchange Einstein had to close its doors after accusations of misuse of customer funds. Research has been done into how Einstein handles the deposited money and cryptocurrency and it appears that the company does not have enough cash to repay customers.
$ 16 million missing
The Globe wrote on November 18 that accountancy firm Grant Thornton stated in a court that the exchange only has 45,000 Canadian dollars (CAD) in cash. Grant Thornton has been appointed by the British Supreme Court of British Columbia to act as interim receiver for Einstein.
Of that 45,000 CAD, 30,000 consists of fiat and 15,000 consists of cryptocurrency. The investigation has been running since May 2019, following complaints from injured customers who were unable to access their funds. The Grant Thorton accounting firm is involved in the investigation from 1 November. There was a rumor that the company was unlawfully handling customers’ funds.
If we have to believe the affected customers, this is not about small amounts. A man claims that the exchange still has $ 535,000 in bitcoins from him. Another customer is even talking about a few millions. Einstein’s customers estimate that the stock market owes them CAD 16 million. The exchange estimates this amount a lot lower, between 8 and 10 million CAD.
The Vancouver exchange has 200,000 registered customers, of which fewer than 300 have contacted Grant Thornton.
At the moment there is no official statement from the Einstein exchange or from the CEO, Michael Gokturk. Whether the money is stolen, lost or misappropriated remains unclear. The einstein.exchange site is also not available.
Canada’s crypto landscape in full development
QuadrigaCX was the first major Canadian cryptocurrency exchange that was closed. After the death of CEO Gerald Cotten in 2018, customers had no access to their bitcoins and other cryptocurrencys. All these coins were stored in a cold wallet (wallet without an internet connection) whose password was only known by the deceased CEO.
In addition, a year ago there was a hack on the Mapleleaf exchange. At the time, many thought this was not a hack, but an ordinary exit cam.
There is also good news, 3iQ has received approval from the Ontario Securities Commission (OSC) for a bitcoin investment fund. The expectation is that the Canadian fund manager will offer the fund on the Toronto Stock Exchange (TSX). 3iQ has used the QuadrigaCX fiasco to convince regulators that a regulated crypto industry is necessary.
The largest bank in Canada, the Royal Bank of Canada (RBC), is also considering opening a cryptocurrency trading platform.