$23 000 000 USD

JULY 2019




“In an unexpected move that surprised most of its users,” “Polish cryptocurrency exchange BitMarket announced its shutdown.” “With an average daily trading volume of around $850,000, BitMarket was the second-largest cryptocurrency exchange in Poland.” “Dear Users, We regret to inform you that due to the loss of liquidity, since 08/07/2019, Bitmarket.pl/net was forced to cease its operations.” “A translation of the report from IQ Partners showed that … BitMarket was unable to settle liabilities by its operator, Kvadratco Services Limited. Gyptrade, which was set to takeover BitMarket, said it won’t be able to complete the process. The company also reportedly filed a complaint with the district prosecutors in the Polish town of Olsztyn, accusing BitMarket of committing fraud.” “A Reddit post suggested that the exchange had been exhibiting odd behavior in the weeks prior to the closure. A Redditor with the username OdoBanks wrote that “red flags” included users being forced to change their passwords without explanation and withdrawals halted over unusual additional know-your-customer procedures.” “Currently, it is not known how BitMarket users will be able to withdraw their funds” “More than 400 investors allegedly lost a total of 2300 bitcoin (worth approximately $23 million,)” “Police are investigating the death of Tobiasz Niemiro, a Polish entrepreneur and co-owner” “Niemiro’s body was found with a bullet wound to the head on Thursday in a forest near his home city of Olsztyn” “Poland’s leading newspaper, Gazeta Wyborcza, which has been heavily following the story, suggested that Niemiro, 44, had committed suicide.” “In separate statements issued after the close of Bitmarket, Niemiro and his co-founder, Marcin Aszkiełowicz, denied allegations that they had misappropriated clients’ funds.” “Niemiro also told Polish website Money.pl, that he was not responsible for administering the exchange funds and had suffered losses himself.” “I lost everything because somebody caused the collapse of the exchange,” he said. “Now I'm losing face and my good name, for which I've worked all my life. I am one of the victims.”

The entire case is shrouded in mystery; however it seems that the exchange was operating with partial reserves for a long period of time, either the result of hacking or poorly managed finances. This was finally uncovered when the operators attempted to sell the exchange, and reported as fraud, which may have resulted in the forced closure. One hope was that requesting additional KYC/AML would reduce the withdrawal requests to a manageable level, however that failed to work. The end result left Niemiro in an impossible position, by which he chose to end his life. The use of proper multi-signature cold storage wallets can prevent theft, both internal and external, by enforcing that all parties agree to every expense or withdrawal. Any hot wallets should be insured. Regular auditing of the exchange enforces that these rules are followed and that any temporary shortage can be corrected.

Sources And Further Reading

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