Over the past few days users from the International Digital Asset Exchange (IDAX) had reported problems making withdrawals. As usual when centralized exchanges have problems with their deposits or withdrawal process, it stirred up a major panic all over Social Media that IDAX was preparing an exit scam.
IDAX were quick to respond to the panic, advising that there was simply a backlog of traders making withdrawals due to their decision to exit the Chinese mainland market. Previously, IDAX had already withdrawn itself from US and Canadian markets, citing that the strict regulations were causing them problems.
This explanation made logical sense, IDAX is after all a Chinese exchange, which undoubtedly had many registered traders that were based out of mainland China. These traders would want to withdraw their funds and move onto another exchange.
Rumours of CEO Lei Guorong Vanishing
A report from Chinese website Blocksite was already painting the picture of a much more sinister tale. Advising that sources inside the company had informed them the CEO and founder Lei Guorong had vanished along with the company's access to their cold wallets. The report gave the reason behind the exit scam being that IDAX was already operating at a deficit, and that closing their Chinese markets meant they would essentially go broke. Essentially, IDAX's employees had no idea where their CEO was, and with no cold wallet access they could not process any withdrawals for their users.
IDAX Global Confirms CEO has vanished
As we have seen time and time again in the cryptocurrency industry even the craziest rumours sometimes turn out to be completely true. Today, IDAX have held their hands up and confirmed they have no idea where their CEO Guorong is, and that he has indeed ran off with their cold wallet's private keys. So to summarise, it appears their CEO has stolen all of their users funds. Is this an organised inside job by IDAX to exit scam, or has the CEO gone rogue?
This disappearance of the CEO has happened only a few days after the many reports that came of Chinese authorities going after local crypto exchanges and operators. Which really paints a perfect picture of why IDAX Global executed an exit scam, operating at a deficit or not, the authorities were most likely on their way to shut down the exchange and CEO Guorong simply knew their operating days were numbered.
Another example of a major security flaw in any centralized cryptocurrency exchange platform: when the funds are being managed by a select few, then you can be sure the greedy will act maliciously. Remember, it is not your funds if you do not have access to them, it is not crypto if you do not have your private keys.
Stay safe and use a DEX.
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