The Supreme Court of British Columbia has granted the province’s exchange commission permission to protect customers of Vancouver-based Einstein Exchange, which last month shut down despite owing customers over $12 million (CAD$16 million).
Last Monday, the Supreme Court granted the British Columbia Securities Commission permission to “preserve and protect any assets of Einstein Exchange.” Accounting firm Grant Thornton was appointed as interim receiver.
A lawyer for Einstein Exchange had told the BSBC it planned to shut down within two months due to a lack of profit. The BSBC had received several complaints from customers unable to access funds on the exchange. Those associated with Einstein also raised concerns with the BSBC that funds were improperly used, and about potential money laundering.
Sammy Wu, a lead investigator for the BSBC, reported to the Court that Einstein bought and sold cryptocurrencies from other exchanges, then resold them to customers. Einstein pooled customers’ funds together, which were then used to fund withdrawal requests.
When asked for financial information. Einstein did not provide a response. When the BSBC asked Einstein’s Counsel for the location of funds, “two hours later, Einstein’s counsel notified me that they no longer represent Einstein.”
Upon visiting Einstein’s office, Wu “discovered that the elevator [was] locked for all floors.”
In January of this year, another Canadian exchange, QuadrigaCX, went bust after the death of its CEO, Gerald Cotten. Cotten, who died of Crohn’s disease whilst travelling to India, supposedly took $190 million worth of funds, held on hardware wallets, with him to the grave—although the wallets were later found to be empty. His widow, Jennifer Robertson, subsequently paid $9 million of her own cash and assets to the exchange’s bankruptcy trustee. Although while Canadian exchanges are struggling, their Bitcoin mines are flourishing.