IDAX Exchange Admits to CEO Exit Scam
After experiencing withdrawal problems, the IDAX exchange admitted it had lost contact with its CEO, also losing access to cold storage.
The IDAX exchange, one of the oldest based on the Chinese market, admitted to losing access to its private keys for cold storage. The exchange’s CEO has been missing for a few days, confirming rumors that the market operator was experiencing a crisis.
The IDAX exchange also saw its native token, IT, slide to zero and become inactive. Users were advised to avoid using the platform.
“Since we have announced the announcement on November 24, IDAX Global CEO have gone missing with unknown cause and IDAX Global staffs were out of touch with IDAX Global CEO.
For this reason, access to Cold wallet which is stored almost all cryptocurrency balances on IDAX has been restricted so in effect, deposit/withdrawal service cannot be provided,” the exchange communicated in its latest statement.
The IDAX exchange denied the initial news that its CEO for the global business, Lei Guorong, had gone missing. But the recent crisis also reveal that an exchange as large and respected as IDAX was also being controlled by a single person, who held all the private keys. Thus, IDAX failed to fulfill the custodial duty to its traders and showed once again that exchanges were a risk for losing access to coins.
Guorong left the exchange a few days ago, with some testimonies from workers that the founder had also taken away all the computers that carried the private keys. For now, there is no measure of how much crypto assets were taken away. In theory, if the addresses were known, the funds could be traced and blocked, if they were sent on exchanges.
The IDAX loss happened during the week when Upbit reported a theft of 342,000 ETH. The heist was also suspected for being an inside job, to hide some of the company’s earnings.
IDAX was in the process of moving out of mainland China, and shedding some of its traders. However, attempted withdrawals in the past weeks failed.