IDAX Locks up Cold Wallet as CEO Vanishes Into Thin Air

www.cryptovibes.com 2019-11-29 11:31
Reading time: ~2 m

In the past few days, China has been increasing pressure on crypto exchanges operating within its jurisdiction. The move by the authorities now appears justified as IDAX crypto exchange suspended deposits and withdrawals after its CEO purportedly vanished. In an official blog post on November 29, IDAX said that the whereabouts of Lei Guorong were at present unknown.

The cryptocurrency exchange had earlier in the week warned that it was seeing a run on withdrawals.

Cold Wallets Also Restricted

According to the blog post:

“Since we have announced the announcement on November 24, IDAX Global CEO has gone missing with unknown cause and IDAX Global staffs were out of touch with IDAX Global CEO.”

It continues to read that the company’s cold wallet was on lockdown as a routine precaution to protect the user funds. The cold wallet is used to store almost all crypto balances on IDAX. Thus, it was restricted after the CEO went missing meaning that all deposit/withdrawal services cannot be provided.

IDAX never linked Lei directly to the cold wallet access. Also, it did not suggest that users’ money was in any way at risk.

Exchanges Encounter Renewed Pressure

This misfortune follows a controversial period for the crypto industry in China. That happened after the local authorities doubled down on the country’s 2017 trading ban last week. According to previous reports, a sweep saw the central bank affirming that it will “dispose of” any exchanges it found flouting the ban.

IDAX immediately stopped serving Chinese users after that announcement at the start of the week. But, its predicament offers another example of the challenges involved when trusting a third party to store cryptocurrency. Earlier in the week, Upbit also stopped users’ access to funds following a suspicious transaction that saw over $50 million leave its books abruptly.

Although investors seem to be waking up to the risks, data collected recently reveals that even the institutional traders still majorly prefer other entities with their funds.