Securities commission says RCMP notified about possible money-laundering concerns at Einstein Exchange
Jason Proctor
CBC Radio
Under a cloud of complaints, investigations and lawsuits, a controversial Vancouver cryptocurrency exchange has shut its doors with more than $16 million owing to customers.
The B.C. Securities Commission (BCSC) obtained an order last week appointing an interim receiver to oversee the Einstein Exchange, after filing a petition in B.C. Supreme Court claiming exchange founder Michael Ongun Gokturk could not be reached.
BCSC executive director Peter Brady told CBC News the commission has also notified the RCMP of concerns about possible money laundering raised by a former exchange employee.
“We received a number of complaints from customers of the exchange being unable to access their assets. We had sent some requests for information to the exchange twice and we didn’t get an answer,” said Brady.
“We were then talking to the company’s counsel and learned that the exchange intended to shut down within 30 to 60 days due to a lack of profit and subsequently that legal counsel stepped down, so that raised concerns for us.”
Einstein Exchange claimed in court documents it had “sufficient crypto assets to satisfy withdrawal requests from customers.”
But the BCSC claimed the exchange’s lawyers refused to specify the location of those assets.
In an affidavit, BCSC investigator Sammy Wu said he believes “Einstein improperly used their customers’ assets.”
Wu said commission staff determined that the company owes customers more than $16.3 million — including more than $11 million in cryptocurrencies and about $5 million in cash.
Wu said he went to the Einstein Exchange office last Friday and “discovered that the elevator is locked for all floors.”
“I called Gokturk’s phone number listed on their website and the recording said all their agents are not available,” Wu’s affidavit said.
“I called Gokturk and his voice mail said that he is unavailable and to send a text message since he does not check voice mail.”
Gokturk spoke to the CBC in January 2018 about a storm of online criticism that accompanied the opening of the exchange. Customers claimed that staff were slow to respond and expressed fear they might lose their money.
At the time, Gokturk claimed his team was overwhelmed by response and demand for digital currency and promised that “no one will lose their money here.”
The company’s website has been taken down but the Einstein Exchange Facebook page is still online. The page features many posts from customers demanding their money and warning others about problems.
On Facebook the company warned its customers about posting their information online because “we have been receiving many complaints that scammers have been targeting Einstein customers who have posted their account emails publicly.”
In addition to multiple customer complaints, the Einstein Exchange is also facing a pair of civil suits filed last month in relation to the transfer of cryptocurrency.
Hong Kong-based Sino Allied filed a notice of civil claim claiming it was still owed $1 million US after Einstein agreed to buy a form of currency named Tether.
And two weeks ago, Vancouver technology entrepreneur Scott Nelson sued Gokturk after claiming he had transferred 50 Bitcoin — equivalent to $535,000 — without receiving any money in return.
Nelson claimed Gokturk told him he would wire the money, but “repeatedly blamed technical issues for the failure.” Nelson said Gokturk then told him he would give him a bank draft, but none was ever delivered.
Gokturk has not filed responses to either of those lawsuits.
A default judgment was also issued last April against Gokturk and Einstein Exchange in relation to $116,789.62 owed on an American Express credit card.
The CBC was unable to reach Gokturk for comment.
Brady said the BCSC has warned investors to exercise caution when dealing with platforms that deal in cryptoassets because they tend to be higher risk.
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