Aussie Cryptocurrency exchange MyCryptoWallet collapses, appoints liquidators

Aussie Cryptocurrency exchange MyCryptoWallet collapses, appoints liquidators

Melbourne-based cryptocurrency exchange MyCryptoWallet’s chief executive, Jaryd Tyson Koenigsmann, appointed liquidators SV Partners on Friday December 3, according to ASIC documents.

MyCryptoWallet was founded in 2017 and has previously declared it had signed up 20,000 customers.

The trading platform allowed people to buy and sell cryptocurrency such as bitcoin, ethereum, XRP and litecoin.

In April, ASIC was also known to be investigating multiple complaints about the MyCryptoWallet.

The company’s accounts were frozen in 2019 after a dispute with NAB.

SV Partners will release its first creditors’ report on 17 December. The administrators are also looking for a buyer to purchase the company’s “technological infrastructure”.

MyCryptoWallet is the second cryptocurrency exchange to fail in two months. In October, Blockchain Global Limited collapsed, owing investors $21 million.

Warning for investors

Unlike banks there is no government guarantee for cryptocurrency exchanges.

“I think that’s one of the things that a lot of consumers don’t understand, that the cryptocurrency held on the exchange is not theirs in the same way. They don’t have direct control over it,” said RMIT Blockchain Innovation Hub’s Aaron Lane. 

“They don’t have custody over those assets. It’s the exchange that has the custody over it.” 

A Senate inquiry has recommended changes to taxation laws, licensing and regulatory regimes to encourage digital and crypto-asset businesses to set-up in Australia.

The global leader, digital transformation practice at Norton Rose Fulbright, Nick Abrahams, said it was critical for the government to act swiftly to regulate exchanges and protect Australians. 

“Because the digital currency exchange space is largely unregulated, it is difficult for people to assess which exchanges are trustworthy,” Mr Abrahams said.

He said the only way to be certain that your crypto was safe was to take it off the exchange and store it in a “cold wallet”.

“A cold wallet is a small piece of hardware [that] is not connected to the internet, [such as] a USB drive. Of course, the problem is that you can lose your cold wallet or the password to access your cold wallet,” he said.

Bitcoin crashes then recovers

The Bitcoin price was hovering just below the $48k level this morning, after a sudden drop early on Saturday saw the leading cryptocurrency fall nearly $10,000 in roughly an hour.

Bitcoin hit a low of around $43,000, as ongoing uncertainty around the omicron coronavirus variant continues to cause havoc in the global financial markets. European stock markets have started the week higher, but will we see a recovery in the cryptocurrency markets?

Saturday was Bitcoin’s biggest price drop since May when it slumped from more than $43,000 to below $32,000 over a 24-hour period – a near 27 per cent decline. The markets have since stabilised, but Bitcoin is still down by more 15 per cent compared to a week earlier.