Regulators seize Einstein Exchange amid money laundering concerns

An affidavit issued by investigators cites improper use of funds and money laundering concerns as Canadian securities regulator the BCSC steps in to protect customers

Einstein Exchange, a Canadian cryptocurrency trading platform, has been seized by regulators and placed into receivership following significant concerns from its customers.

On Monday, Canadian securities regulator the British Columbia Securities Commission (BCSC) announced in a press release that it was taking steps to “protect the customers” of Einstein Exchange by placing it in receivership.

Official documentation cites a lack of profit as a motive for the closure. It’s believed that the exchange owes customers over $16 million CAD.

Multiple complaints received

The official investigation against Einstein Exchange began on May 6, 2019. Supporting documents from the BCSC claim that prior to the exchange’s closure and subsequent seizure, the regulator received “multiple complaints” from members of the public.

Complaints were mainly from concerned users of Einstein Exchange who were unable to withdraw their funds.

However, more sinister complaints from those inside Einstein Exchange, including shareholders, allege that the exchange was potentially engaging in money laundering activities.

Affidavit issued

Proceedings against Einstein Exchange were confirmed by Sammy Wu, lead investigator for the BCSC, who issued an affidavit on November 1.

In what is perhaps the most interesting aspect of the case, the affidavit states that BCSC staff believe that Einstein Exchange was facilitating the trading of securities. This would require official licencing from a regional Canadian Securities Administrator, which the exchange had not filled for.

Wu also states that in the course of his investigation, it was found that Einstein Exchange was deficient in both fiat and cryptocurrency reserves.

Receivers appointed

To oversee the process of receivership, international accounting agency Grant Thornton has been appointed by order of the Supreme Court of British Columbia to protect the assets of the Einstein Group. Grant Thornton’s receivers officially entered Einstein Exchange’s premises on November 1.

The official process, which should eventually see creditors and users of Einstein Exchange reimbursed, will seek to identify and value any assets the exchange has remaining. This includes digital assets, which the exchange previously assured customers it held in reserve.

Despite this, Einstein’s legal counsel – who have since stepped down – informed the BCSC that the exchange has yet to decide how to close its operations.

Official response

The exchange, which hasn’t been active on Twitter since mid-July, is yet to release a public statement. Einstein Exchange’s website is also unavailable at the time of writing.

Legal representatives of the exchange say customers will be informed of the exchange’s status in the next 30 to 60 days.

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