No Trace of Einstein Exchange Funds, Exchange Closes for Good
The Grant Thornton interim receivership failed to discover evidence of funds held by the Canadian exchange.
The Einstein exchange did not provide any documents or evidence regarding its ownership of either crypto or fiat funds, and has closed effectively with what looks like an exit scam. Its CEO, Michael Gokturk, has disappeared from social media.
The exchange was put into a procedure of receivership, in which the British Columbia Securities Commission took over the shell company of Einstein Group. The interim appointed receiver, Grant Thornton, LTD., went over the company’s documents during the mandate from November 1 to November 18.
The investigation revealed that the exchange could have taken off as much as CAD $16 million. Gokturk’s claims clash with that number, suggesting CAD $8-10 million, most of it in crypto assets. In a manner resembling the losses of QuadrigaCX, Einstein exchange did not present any wallet addresses for the 19 digital assets it carried.
Observers of the market operator noted that Einstein Exchange only honored withdrawals from the pool of newly deposited funds. The crypto assets, as well as USD and CAD deposits were pooled, and the exchange operated with deficits.
Over the past year, Einstein gave off worrying signs, mostly by not honoring withdrawals. The exchange is investigated since June, and only recently stated it would close business or sell itself to a US-based company.
Canadian exchanges operate under favorable enough conditions, and handle fiat, expanding the potential damage. Fiat-to-crypto exchanges are attractive to traders, for the opportunity to liquidate funds directly. However, Einstein is yet another Canadian market to go underwater, after QuadrigaCX and the minor Maple Exchange.
The past year saw a consolidation of exchanges, as trading moved to international platforms. Smaller exchanges revealed losses, and markets closed due to stricter requirements. The case of Einstein was unique in that the signals of insolvency caused the BCSC to move in and take control of the company.
But so far, the regulator has not seized any digital coins, leaving its ownership of just a shell company.