IDAX, a Chinese cryptocurrency exchange, has suspended deposits and withdrawals after its CEO allegedly disappeared in what looks like an exit scam.
In a blog post earlier today, IDAX said it was suspending all activity on the exchange after staff said they had been unable to contact their CEO, Lei Guorong, since November 24. As a result, the exchange has also lost access to its cold storage. IDAX initially denied that the disappearance was an exit scam; however, in another statement today, it has confirmed that this is indeed the case. An exit scam is a fraudulent practice by unethical cryptocurrency promoters who vanish with investors’ money during or after an ICO.
“Since we have announced the announcement on November 24, IDAX Global CEO have gone missing with unknown cause and IDAX Global staffs were out of touch with IDAX Global CEO. For this reason, access to Cold wallet which is stored almost all cryptocurrency balances on IDAX has been restricted so in effect, deposit/withdrawal service cannot be provided,” read today’s statement.
The situation comes after a difficult period for cryptocurrency in China after authorities doubled down on the country’s 2017 trading ban last week, with the central bank vowing to “dispose of” any exchanges it found in breach of the ban. The IDAX exit scam comes just a week after South Korean Exchange UPbit lost almost $50 million USD worth of crypto in an alleged hack.
The nature of the UPbit hack has led some speculators to believe that it may have been an inside job. Cointelegraph reporter Joseph Young tweeted, “The ‘hacker’ timed when UPbit was making crypto transfers to its cold wallet (other alts like TRON, etc.). Hence, I think the probability of it being an inside job is higher than external breach.”
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It is interesting to note that both the IDAX scam and the UPbit hack coincide with not only with the Chinese government’s clampdown of crypto but also at a time when Bitcoin’s value is bearish, with many analysts speculating that further declines are still to come.
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