Following almost a week of rumors and missing withdrawals, the cryptocurrency exchange IDAX Global has made an announcement. It appears its CEO has gone missing — forcing the company to restrict access to its cold storage solution.
The news from IDAX comes just days after the exchange suddenly announced its withdrawal from the Chinese market entirely. Citing “policy reasons,” a statement on November 25 explained that the company would no longer provide its services to China. Although not explicit, the sudden announcement seems almost certainly linked with recent news of a further clampdown on digital currency trading venues by the Chinese government. BeInCrypto first reported on shutdowns in the Chinese cryptocurrency industry earlier this week.
On the same day that IDAX departed China, the firm also announced that it was facing a higher-than-average demand for customer withdrawals and was, therefore, taking longer than usual. This is to be expected since a large portion of IDAX’s recent $750,000 trade volume appears to have originated in China — although the exchange appears to have had multiple headquarters, including one reported in Mongolia.
Even prior to the announcements, rumors suggesting an exit scam appeared on Chinese micro-blogging site Weibo.com. Some speculated that the company had recently fired a large number of employees and those left were unable to contact the CEO. The rumours also made it to Twitter.
— KinggKoinzz (@kryptokingg) November 24, 2019
Today, the exchange broke the silence, confirming that the CEO had indeed disappeared. An “urgent notice” from the platform said that the IDAX Global CEO was unable to be contacted by anyone at the company. Although the communication is brief, it appears that the exchange has taken the decision to restrict access to its cold storage solution and not allow users to either withdraw or deposit funds. The website itself is still up and running, however.
IDAX now claims to be in the process of forming an “emergency plan” to begin allowing customer deposits and withdrawals. In the meantime, it recommends users “refrain from using our all [sic.] platform services.”
The story is somewhat reminiscent of one that broke at the beginning of 2019. In the example of Quadriga CX, the CEO of the Canadian exchange reportedly died while holding the only private keys to cold storage used by the trading venue. Many customers were left out of pocket to the tune of around $200 million.
From today’s statement, it looks like IDAX had a more secure system in place for dealing with its cold storage. Although BeInCrypto cannot yet confirm, no funds have so far been reported missing in relation to the apparently vanished CEO. However, the lost funds from Quadriga CX, the sudden lockdown on withdrawals at IDAX, and many examples like them serve as yet more reminders of the importance of not trusting centralised, unregulated exchanges with cryptocurrency holdings.