A troubled Vancouver cryptocurrency business that was shut down in early November amid allegations that it owes its clients $16 million only has about $45,000 in “hard assets” remaining, according to a court-appointed receiver.
The B.C. Securities Commission (BCSC) shut down Vancouver’s Einstein Exchange after investigating numerous complaints from clients who said they could not access their cash and cryptocurrency assets from the company, which offered crypto-trading services.
A receiver, Grant Thornton Limited, was appointed to seize Einstein’s assets and return the allegedly missing funds to clients. Most of the assets included cryptocurrency, such as Bitcoin, according to BCSC case filings.
But in a Nov. 18 B.C. Supreme Court filing, the receiver says “based on a very limited review of Einstein Groups’s books and records,” it has discovered the company retains only about $15,000 in cryptocurrency assets and $30,000 in cash.
As the Bitcoin market boomed, the company was incorporated in December 2017 by director Michael Ongun Gokturk. The BCSC launched an investigation into customer complaints in May 2019, filings say, and alleges Einstein improperly used its customer assets.
One man claims he is owed $535,000 in unpaid bitcoins, and another unidentified creditor claims to be owed “several million dollars,” the filings from Grant Thornton Limited say.
So far, the receiver has issued notices to numerous banks in Canada and the U.S., “as well as Cannacord Genuity in Vancouver,” the filings say, “where Gokturk and/or Einstein Group may have deposits or investments.”
The receiver has also seized shares in various private companies, and is investigating whether Gokturk or others have “beneficial” interests in various accounts.
Gokturk could not be reached for comment by Global News, and he has not responded to the allegations in BCSC case filings.
However, filings say the Einstein Group has informed the receiver that it believes it owes customers between US$8 and $10 million.
The company claims “this deficit stems for a series of credit card and bank draft frauds that the Einstein Group suffered, and that the majority of this loss is made up of cryptocurrency assets.”
The company had about 200,000 clients around the world, and the receiver has so far received inquiries from between two and three hundred customers.
The receiver immediately moved to secure company records on Nov. 1, filings say, “but was stalled for approximately ten days while Einstein Group and Mr. Gokturk retained legal counsel.”
It wasn’t until Nov. 11 that the receiver “gained substantial access to the Einstein Group’s digital books and records.”