MyCryptoWallet, the Australian crypto exchange with a troubled past, has entered a liquidation process, with investors expected to lose their money.
MyCryptoWallet going under
Following a troubled past, MyCryptoWallet finally collapsed under the onslaught of customer complaints and allegations of missing funds. The exchange has had a troubled past and has halted withdrawals several times in the last few years over missing funds and supposed contract suspensions from its partners.
However, things appear to be even worse this time, as SV Partners was appointed as liquidator for the exchange. MyCryptoWallet, a creation by Jaryd Koenigsmann in 2017, operated as a cryptocurrency exchange, where users could trade the most popular crypto assets like Bitcoin, Ethereum, and Ripple.
When the company reported withdrawal problems for the first time in 2019, customers were not very concerned. But then withdrawal problems kept reappearing, and there was every reason for customers to be concerned, which eventually forced CEO Koenigsmann to make reassuring statements to soothe nerves.
An investigation by The Age and The Sydney Morning Herald this April revealed the truly dire state of MyCryptoWallet. The exchange was barely functioning; users were outright missing wallet balances or reported they could not withdraw (yet again).
Koenigsmann’s second business failure
Although the report did not blame Mr. Koenigsmann himself for the exchanges failure to allow customers to withdraw their funds, MyCryptoWallet is the entrepreneur’s second failed business venture, after his first company, pets classified service MyNewPet, failed last summer.
Corporate regulator ASIC and the appointed liquidator will now have to clean up the mess, but it remains unclear how much customers can be expected to recover. A spokesperson for SV Partners insisted that customers should reach out to the firm to get an idea of how much MyCryptoWallet still owes.
Another failed Australian crypto exchange
Even though Australian crypto businesses have been booming in 2021, with several crypto entrepreneurs ranking among the country’s richest people thanks to their successful upstarts, MyCryptoWallet is a cautionary tale of what can happen to crypto businesses down under, as it is not the first failed crypto exchange in Australia. Earlier this year, Melbourne-based ACX opted for voluntary administration by liquidators after disclosing that it owed $21 million AUD to creditors.
Australian exchanges only need to have the most rudimentary of regulation and be registered with AUSTRAC, the country’s financial crime watchdog that oversees anti-money laundering issues. That leads to exchanges having perverse incentives of setting up shop in a booming market and barely facing punishment in case it goes wrong.
The recent Senate Committee report seeks to remedy this, as it would require exchanges to hold a market license similar to that of stock market exchanges like the ASX, thereby providing investors with some much-needed security that exchanges at least meet some minimum standard.
That, however, will be too little too late for the unsuspecting MyCryptoWallet investors, who must feel like the exchange is pulling their leg when it sees itself as the victim of a “negative shill campaign” and claims to be “completely unaware” of fundamental problems. Although one bad apple doesn’t spoil the harvest, it can certainly diminish investors’ appetite for more.