Einstein Exchange

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Einstein Exchange

The small team at Einstein boasted "300,000 satisfied customers" on their website, and continued to take on more business through mounting withdrawal delays posted across social media.

Among the great features of this exchange was the ability to quickly convert credit card purchases and bank drafts into cryptocurrency which could then be withdrawn immediately, which was a hit among investors and fraudsters alike. In the boom periods in 2017, the company struggled to keep up with all the activity, and it seemingly failed to realize the massive shortfall which was developing over time.

Given that obscurity is the industry norm, nobody expected any visibility into the finances, or that any audits should be done. It seems like the company did their best to honour the withdrawals of those who desperately needed the money for as long as they could before the whole situation met its ultimate end and the masks came off on Halloween 2019.

At least victims were spared the stress of a long and gruelling bankruptcy - there were no assets left.

This exchange or platform is based in Canada, or the incident targeted people primarily in Canada.

About Einstein Exchange

“On November 1, the BCSC applied to the Supreme Court of British Columbia for an order appointing an interim receiver to preserve and protect any assets of Einstein Exchange. The Court granted the application and appointed Grant Thornton Limited as interim receiver. Grant Thornton subsequently entered and secured the premises of Einstein Exchange on November 1.”

"The interim receiver assigned to oversee the company's finances and take control of any remaining assets, Grant Thornton, said in a report Monday that Einstein now has just CA$45,000 (US$34,000) left of CA$16 million-worth (US$12 million) claimed by users of the exchange."

“Grant Thornton Limited was discharged as Interim Receiver of Einstein Capital Partners Ltd., Einstein Exchange Inc., Einstein Law Corporation and Michael Ongun Gokturk pursuant to a Court order that was pronounced on November 18, 2019, a copy of which can be found below under “Court Orders”. A copy of the Interim Receiver’s First Report to Court, dated November 14, 2019, can be found below under “Court Reports”.”

“Gokturk attributed the losses to frauds with credit cards and bank drafts. He said that the majority of the loss was in cryptos.” "It was just madness," said Michael Gokturk, co-founder of the Einstein Exchange.

This exchange or platform is based in Canada, or the incident targeted people primarily in Canada.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Einstein Exchange

Date	Event	Description
November 1st, 2019 12:01:31 AM MDT	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

The total amount lost has been estimated at $12,000,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

General Prevention Policies

The structure of Einstein was such that fraud was able to continue for much of it's existence without any critical reflection on what policies and processes might be done differently.

Were there any form of audit or Proof of Reserve process in place, it would have been apparent to everyone that problems were mounting years before they reached the point of closing the doors with $16m CAD$ lost.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.