Investors lost 8.8billion won in China’s exchange IDAX
The damages caused by IDAX, China’s cryptocurrency exchange, are said to amount to 8.8 billion won ($7.4 million). Lei Guorong, CEO of the exchange, has gone missing with investors’ assets. Related figures have been arrested by the police in Shanghai. Industry insiders think it is unlikely that investors will ever see their money again. A Chinese media outlet said on Tuesday that 438 users at IDAX lost a total of 8.8 billion won because of AWOL CEO, citing a source with knowledge of the matter. Earlier on Nov. 24, a complaint against IDAX was revealed on the Internet. The document accused IDAX of operating the Shanghai-based exchange using a license issued for is Mongolian cryptocurrency exchange. Lei Guorong disappeared. IDAX issued a statement that day, saying that it “will no longer serve users in China due to policy reasons.” It went on to note that “Recently, the demand for IDAX withdrawals has increased dramatically. The channel that causes the withdrawal of the mainstream currency is in a congested state. IDAX is reviewing the user's withdrawal requirements, please wait patiently.” Five days after the announcement, IDAX Global admitted the reports, saying that the “IDAX Global CEO has gone missing with unknown cause and IDAX Global staff were out of touch with the IDAX Global CEO.” It notified users that “for this reason, access to [the] cold wallet which [contains] almost all cryptocurrency balances on IDAX has been restricted so in effect, deposit/withdrawal services cannot be provided.” The Chinese authorities launched an investigation with the Shanghai police announcing that a probe is underway in relation to the IDAX case. The two offices in Shanghai were shut down and some staff were arrested. Still, the CEO has not been caught. The police are on track to collect details on the damages caused by IDAX. Now, the attention goes toward whether affected users are covered. Compensation can be carried out in two ways. Victims can file a civil lawsuit or criminal suit. But the disappearance of the CEO typically involves a criminal suit. Even if affected users have the right to claim compensation, it would be challenging to actually get covered. “Under Chinese law, the purchase of cryptocurrency is not illegal, so they are able to seek damages,” Xukai, a lawyer from a Beijing-based law firm Deheng. “But since some exchanges are registered outside of China, there will be limitations for the Chinese investigation forces to engage in the case.” As IDAX filed its registration in Mongolia, challenges are expected.