Regulator seizes control of Canadian crypto exchange on verge of shutting down

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A cryptocurrency exchange out of Vancouver, British Columbia (BC), has found itself on the receiving end of regulators’ wrath. The Einstein Exchange has been forcefully shut down by the BC Securities Commission (BCSC) after concerns were raised about its operations by users. The commission moved in last Friday to take control and try to protect consumers from suffering major losses if the exchange suddenly were to go dark.

The BCSC approached the Supreme Court of BC on November 1, requesting an order to assign a receiver to oversee and protect the exchange’s assets. The request was immediately granted and Grant Thornton Ltd was assigned the interim receiver. The company went in the same day, securing the premises and all assets.

According to a press release by the BCSC, the commission had already received a number of complaints from customers of the exchange who had been unable to access their funds. An Einstein lawyer then told the commission, on October 31, that the exchange would be closing its doors within 30 to 60 days because it was running out of money. That acknowledgment, plus the refusal by the lawyer to tell the commission where assets were being held, was enough for the BCSC to act, looking to proactively protect consumers before the exchange’s leaders could disappear.

An investigator with the commission, Sammy Wu, signed an affidavit in which he had stated that Einstein had “improperly used” customer assets. The BCSC was able to reportedly determine that the company owes over $14 million in digital currency and cash to its customers, but adds that the company’s founder, Michael Ongun Gokturk, has not been willing to cooperate with the investigation.

Gokturk and Einstein were already facing a significant amount of bad press, as well as two lawsuits. One was brought by a company who was never paid after Einstein purchased about $1 million in Tether, and the other is from an entrepreneur who transferred 50 BTC, currently worth about $464,244, without receiving the cash equivalent as stipulated in the deal. Gokturk is also reportedly on the hook for around $88,000 that is owed to American Express.