Crypto in the spotlight as two Australian exchanges collapse with $ 50 million lost

Parbit

Legal experts sounding the alarm bells after Blockchain Global (BG), the parent company of the ACX crypto exchange, went into voluntary administration in September.

Likewise, Mycryptowallet collapsed last week, prompting further calls for tighter regulation of the crypto industry as a whole.

According to the Guardian, $ 50 million in cryptocurrency is lost between the two incidents, with ACX accounting for the vast majority of the missing funds.

Australian Crypto Firms Go After Them

September 13, Supreme Court of Victoria ordered the freeze of 117 Bitcoin held by BG and ACX following a dispute between former business partners Sam Lee, Allan Guo and Jin Chen.

Melbourne-based ACX shut down in early 2020, freezing user accounts. About 200 investors came forward, claiming a total loss of $ 7 million (AU $ 10 million).

Blockchain Australia has imposed a lifetime ban in response, while financial regulators AUSTRAC have revoked the platform’s digital currency registration.

Since then, forensic accountants have examined the company’s financial records to find a black hole close to $ 50 million, rather than the $ 7 million originally planned.

Andrew Yeo, a partner in financial services firm Pitcher Partners said he did not know what happened to money belonging to hundreds of ACX clients. But he’s determined to find out.

Two months ago, Pitcher Partners was appointed to oversee the administration of BG; However, Yeo admits that he is not a crypto specialist.

“It is clear that there are a number of survey channels that we can have and figuring out which ones are best to follow first is not a simple task.. “

Likewise, last week the crypto exchange Mycryptowallet collapsed with hundreds of thousands of thoughts due.

Earlier this year, Australian media reported that users complained about not being able to withdraw missing funds and balances. Mycryptowallet called the concerns a “negative shill campaign”.

But now, as the liquidation process begins, insolvency firm SV Partners has called on all affected users to come forward.

Crypto under fire from critics

The fallout from the two meltdowns prompted lawmakers to speak out against the crypto industry, especially regarding the lack of guarantees and investor protections in place when it comes to digital currency.

Advisor and researcher at RMIT Blockchain Innovation Hub Aaron Lane said funds held on the stock exchange present a significant third-party risk.

“I think it’s one of the things that a lot of consumers don’t understand, that cryptocurrency held on the exchange doesn’t belong to them in the same way. They don’t have direct control over it.

Additionally, since the crypto space is not regulated to the same extent as the banking industry, users are confused about which exchanges are trustworthy and have protections to protect user funds.

Josh frydenberg, the Australian treasurer, said the government was in the process of establishing a crypto exchange licensing system. This should be finalized by the middle of next year.

Posted in: Australia, Exchanges
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