It’s a tale with which those of us in the Bitcoin world are all too familiar. A Bitcoin exchange disappears under mysterious circumstances, and its users are left in the dark.
And sadly, it seems to have happened again. This time the culprit is BitXoin, an Australian exchange.
What Happened This Time?
The controversy started when a BitXoin user took to the online forum Law Answers with a complaint about the service in May.
The user, who went by jezza90, claims to have sent $2528 AUD to BitXoin, and to never have received the BTC he purchased with those funds.
The company failed to provide what I paid for, have not contacted me AT ALL, even though I have sent them dozens of emails and phone calls.
After 3 days of me ringing them, they disconnected their business phones, and I still have not heard back from them in any way after 1 week of them taking my money.
Several other forum members expressed similar experiences. After numerous attempts at contact from each of them, they eventually did get in contact with BitXoin CEO David Collinson, who acted evasive and gave non-committal responses.
(sic) Alot of things are going on. Apologies for delayed response. I will get back to you as soon as I can. As company director I have to handle things a certain way.
Closing Its Doors
User Jamesq, one of the claimants against BitXoin, received two emails from Roosevelt Group International, the parent company of BitXoin.
They explained that BitXoin was disabled “such as to prevent further orders being placed”, and alluded to its insolvency, though it didn’t explicitly state the fact.
They also said “the decision to sell the website & related business has just been made”, and that “the consequence of all of this is that incomplete orders, currently unable to be filled, cannot be completed until additional capital is secured.”
The second email, however, offered the damaged parties compensation in the form of securities in another business held by Roosevelt Group, which they would offer through Counterparty. They were, however, still working out the details.
To be clear, you will receive units for free. When issued, these units will be saleable. Further units will be issued, in two rounds, to other parties, each at a higher value to the last. This should see you endowed with a cashable asset holding well in excess of your loss. My personal estimate, is that you will see value gain in the order of three to ten times your loss, if you hold through the two subsequent issuances.
David Collinson himself joined the thread, blaming embezzlement by his former partner, bank errors, coding errors, and even the Law Answers forum thread itself, among many other issues for the state of BitXoin.
Nearly two weeks later, though. no one had heard from Collinson regarding the securities.
Collinson did eventually contact one forum member, and “requested I sign a confidentiality agreement soon which I am happy to do so. He will then send me a list of disaffected customers and through me will get me to contact and update all and will be made whole as previously outlined.”
Unanswered Questions
At the time of this writing, there has been no confirmation if or when the affected BitXoin users will be compensated.
It’s also unclear what happened to the funds sent to BitXoin by the affected users.
As it stands. BitXoin’s website still stands, though their security certificate has been revoked. Clicking on their “Buy Bitcoins” button opens a box saying “Online shop is now closed.”
It may be worthwhile to give David Collinson the benefit of the doubt, but Bitcoiners are especially wary of being burned after the collapse of Mt. Gox, Neo & Bee, Flexcoin, Dogevault, and the legion of other cryptocurrency services through which, for one reason or another, users have lost their coins.
Will the name David Collinson find company among Mark Karpeles and Danny Brewster? Only time will tell.
Has Yet Another Bitcoin Exchange Bitten The Dust?
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