The parent company of Melbourne-based Australian crypto exchange ACX defaulted on $15 million worth of outstanding debts.
What is ACX and what happened to it?
ACX.io was a cryptocurrency exchange based out of Melbourne. Although its amateurish-looking website left much to be desired, ACX branded itself as Australia’s most liquid Bitcoin exchange. In January 2020, the exchange suspended withdrawals and deposits and blamed a mysterious audit as the reason. Concerned customers visited the exchange’s office, only to find it closed and the company’s hot wallet to be drained of the funds.
Following this dubious business practice, the board of Blockchain Australia revoked the exchange’s membership. Several customers also came forward with outstanding accounts between 10,000 AUD and 50,000 AUD, and one Facebook group even had a combined $1 million tied up on the platform.
ACX goes under for good
Fast forward to November 2021 and ACX has officially defaulted on its outstanding debt. The Victoria Supreme Court placed a freeze order on the outstanding 117.33 BTC held by BGL and ACX Tech, the companies behind the exchange. Both were ordered to disclose the full scope of assets held but failed to meet the deadline.
Sam Lee, Chief Executive Officer of BGL, noted that he was reappointed in April 2020 after the company had ceased to have any operations and that he had not made any key business decisions, nor negotiated any debt. He also distanced himself from BGL and lauded the decision from the existing directors as being in the “best interest of creditors and shareholders.” Lee added that he had abstained from all decision-making after his appointment since he had not had enough visibility to make informed decisions.
That, of course, will not console ACX’s customers, who are left holding the proverbial bag. Losses are estimated to amount to $7.4 million, with about 200 investors still hoping to recover their funds. Even though AUSTRAC had long revoked the exchange’s digital currency license, ACX investors were still hoping for a favorable solution. The default of BGL has probably put an end to their hopes. One anonymous investor is quoted to be wondering “what the hell” was going on in this saga.
Crypto regulation to the rescue
Following the infamous collapse of Mt. Gox in 2013, crypto exchanges had, by and large, been holding up quite well, with few robbing users of their funds. Still, without proper regulation, users are always at risk of rogue exchanges, and this is where the Senate Committee’s Crypto Report comes in.
Launched with the goal of making Australia a crypto hub, it introduced 12 much-needed regulatory recommendations to make crypto safer for retail investors and give the industry the guidance it was asking for. While it is still unclear whether these recommendations will actually be adopted, the report is a step in the right direction after Australian regulators had dragged their feet on the booming crypto sector for months on end. Even if some of the recommendations eventually pass legislation, they will probably not help ACX’s victims. At least, though, they could help prevent the next ACX.