Troubled exchange MyCryptoWallet bites the dust after barrage of complaints

Troubled cryptocurrency exchange MyCryptoWallet has collapsed after a barrage of complaints from users and allegations of missing funds, with the business likely owing creditors hundreds of thousands of dollars in crypto assets.

Last Friday, insolvency firm SV Partners was appointed liquidator of the business. MyCryptoWallet was founded in 2017 by Jaryd Koenigsmann and operates as a trading platform, allowing users to buy, sell and swap currencies such as Bitcoin, Ethereum and Ripple.

A screengrab of the MyCryptoWallet website as it appeared on April 1.

However, an investigation by The Age and The Sydney Morning Herald in April revealed the exchange was barely functional, with numerous users reporting issues with accessing or withdrawing their funds stored on the exchange, with some saying their coins had disappeared entirely. The Age and The Sydney Morning Herald do not suggest that Mr Koenigsmann is responsible for users’ missing funds.

Numerous complaints were made to the corporate regulator ASIC, which confirmed it was assessing the alleged issues. Following the investigation, some users reported they had been able to contact the exchange to retrieve some of their funds, however, the majority were still unable to access the platform.

Friday’s collapse likely indicates MyCryptoWallet has been unable to overcome the issues plaguing it, opting instead to liquidate the business. It’s not known what return, if any, affected creditors will receive. A spokesperson for SV Partners has urged anyone impacted by the collapse to contact the firm.

This marks the second business operated by Mr Koenigsmann to collapse in recent years, with the 28-year-old’ former venture, pet classifieds service MyNewPet, going under in July last year. Mr Koenigsmann could not be reached for comment.

MyCryptoWallet is not the first Australian cryptocurrency exchange to collapse, with trading platform ACX entering voluntary administration earlier this year, owing creditors $21 million.

These failures are indicative of the risks facing investors when choosing to invest in crypto locally, as Australian exchanges are currently only required to have the most rudimentary of regulation, only needing to be registered with the financial crime watchdog AUSTRAC for anti-money laundering purposes.

Regulations proposed by the recent parliamentary committee report into the cryptocurrency sector would see this changed, however, with crypto exchanges required to hold a market license similar to the ones under which major stock exchanges like the ASX operate under.

Crypto prices have also taken a battering over the past week, with Bitcoin falling over 10 per cent since the start of the month and other coins, such as Ethereum, also diving.

SV Partners will look to sell off the technological infrastructure of the business in a sale process set to kick off at the end of the week. A creditors report will also be distributed next week.

Representatives for the exchange have been contacted for comment. At the time of the investigation, a spokesperson for MyCryptoWallet accused The Age and The Sydney Morning Herald of engaging in a “negative shill campaign” and assured that the company was “completely unaware” of any issues with the exchange.

“It is quite upsetting to hear you are creating an article about false negativity regarding MyCryptoWallet rather than the amazing ground-breaking blockchain technology we offer Australian users,” the spokeswoman said at the time.

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