Andrew Yeo doesn’t know what’s happened to tens of millions of dollars worth of cryptocurrency belonging to hundreds of clients of the collapsed exchange ACX, but he aims to find out.
In mid-October the veteran insolvency practitioner was appointed administrator of Blockchain Global, the company that used to run ACX, and since then he’s been getting a crash course in all things crypto from the tech experts at the firm where he’s a partner, Pitcher Partners.
“There’s always stuff that’s different – you have that on every job,” he says.
“Its always about finding out what’s different about this industry and how you can use it.”
A cryptocurrency exchange is digital marketplace that enables customers to buy, sell and hold cryptocurrencies. It makes money through set fees or by taking a percentage of transactions. No mainstream banks in Australia allow customers to buy and sell cryptocurrencies, although the Commonwealth bank has a pilot in the works, so exchanges are currently the only means to do this.
To get to the bottom of what has happened to the cash and coins held in the accounts of ACX customers, Yeo will need to cut through a jungle of claims and counter-claims that have been playing out in court since last year.
“It’s clear that there’s a number of channels of investigation which we may have available and determining which ones are best to follow first is not a simple task,” he says.
There’s plenty at stake. Since Yeo’s appointment, creditors, including ACX clients and Blockchain Global’s directors and management, have come forward with claims they are owed close to $50m.
ACX is not the only Australian exchange to run into trouble in what is – for now – a completely unregulated industry.
Last week, the smaller exchange Mycryptowallet also fell into administration, reportedly owing clients hundreds of thousands of dollars.
Globally, exchanges have proven vulnerable to failure and theft; Japanese operation Mt Gox collapsed in 2014 after someone stole 850,000 bitcoins from it and in 2016 hackers stole almost 120,000 bitcoins from the British Virgin Islands group Bitfinex, which managed to survive and still exists today. It’s not suggested that ACX’s assets have been stolen.
This week, the Morrison government announced plans to regulate exchanges – some time in the future.
In a speech on Thursday to the Australia-Israel Chamber of Commerce, the treasurer, Josh Frydenberg, said the government would consult on establishing a licensing system for digital currency exchanges, together with regulation of businesses that hold custody of …….