Millions may have been stolen after the chief executive officer of a little-known Asian cryptocurrency exchange called IDAX disappeared with the keys to the company’s cold wallets in a possible exit scam.
Asian is the only description applicable to the company as its origins are at best clouded. The company itself appears to be operated out of Shanghai, noting that cryptocurrency exchanges are illegal in China but was registered in both Singapore and Mongolia.
What is known is that CEO Lei Guorong has disappeared, a fact confirmed by IDAX itself. In a statement on Friday, the company said that “IDAX Global CEO have gone missing with unknown cause and IDAX Global staffs were out of touch with IDAX Global CEO.” As a consequence, the company has suspended all deposits and withdrawals.
Suspending withdrawals, while a wise move may be due to the company not having access to client funds held in cold wallets if reports that Guorong took the keys with him when he disappeared are correct.
Exactly how much could have been stolen is pure speculation at this point. While little known in the west, IDAX itself can’t be called a small exchange. By volume, the exchange, prior to the CEO disappearing announcement being made, was ranked 12th in the world with $757 million being traded over a 24-hour period. At the very least the amount stolen could be in the low millions to as high as hundreds of millions.
The company was being operated illegally in China and the disappearance of the CEO could be linked. On Nov. 24 IDAX announced that it would no longer provide services for users in China. That it was dubious that it was providing services within China to begin with, particularly given that while registered outside the country was actually being operated inside mainland China would suggest that it had caught the attention of authorities.
Presuming that is the case, the CEO may have disappeared to avoid being arrested or alternatively he may have actually been arrested and that’s why he’s disappeared. What is clear is that no one, including the company itself, knows where he is.
The news of a potential exit scam at IDAX comes days after $52 million in Ethereum was reported to have been stolen from South Korean cryptocurrency exchange Upbit. The theft at Upbit is suspected to be an inside job.
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