With hackers getting the best of the crypto exchanges, billions of dollars in funds are lost every year. The lack of regulations and poor security of the exchanges has caused enough damage already. With the number of hacks across the crypto industry rising every day, new investors are hesitant about putting their money on the line. This, in turn, has blocked the flow of fresh money into the crypto market.
Many times it is not even the hackers that are to blame. There are many instances where scammers end up tricking people into giving them their money willingly. These scams have gone to such extent that people are even getting scammed on Tinder, the popular online dating app.
Scam exchanges are also of rising concern. Over the decade that cryptocurrencies have existed, many exchanges have come and gone. While some fall prey to bad circumstances, others are often a planned exit scam. Reports state that close to $3.1 billion was lost to exit scams in 2019 alone.
Some cases often see funds disappearing mysteriously from exchanges. Just last week, The Daily Chain reported that Upbit saw a suspicious transfer of 342,000 ETH ($50 million) from the exchange’s hot wallet to an unknown wallet. The exchange halted deposits and withdrawals as authorities are looking into the matter.
A more recent report involves Chinese cryptocurrency exchange IDAX, which has suddenly halted all deposits and withdrawals. Supposedly, the CEO of the exchange Lei Guorong has disappeared as the announcement on IDAX’s official website states that:
“IDAX Global CEO have gone missing with unknown cause and IDAX Global staffs were out of touch with IDAX Global CEO.”
The news was first covered by Chinese media outlet Blocklike, which reports that a prior employee of IDAX has revealed that Lei has “run” as the exchange was running a deficit. Customers had started to face service lapses right after IDAX announced on November 24th that it would no longer continue its service in China due to regulatory constraints. The people familiar with the matter further reported that:
“The platform has fallen short, the cold wallet has been taken away by the CEO, a large amount of platform coins and user assets have fallen short, and the server has been shut down a lot.“
The reports that have surfaced don’t shed light on the matter as to what has actually happened to the CEO or why did he disappear, but rumours state that this was an exit scam. Many have also linked the troubles IDAX is facing to China’s recent crackdown on crypto.
The various risks surrounding cryptocurrencies and investing in cryptocurrencies are too high. These events are also one of the prime reasons why governments turn a blind eye towards cryptocurrencies and are hesitant towards adopting it.