Crypto losses pass $50m as bitcoins vanish

Investor losses at failed Blockchain Global more than double as administrators try to track missing bitcoins.

Andrew Yeo, who is handling the administration, said 107 proofs of claim had been filed to date, taking the maximum owed by the Blockchain Global to $48.9m.

Investor losses at failed cryptocurrency outfit Blockchain Global have more than doubled to above $50m as administrators try to track large amounts of missing bitcoins.

Pitcher Partners had originally estimated that about $21m was owing to creditors when the company – which operated the ACX cryptocurrency platform – collapsed in mid-October.

Andrew Yeo, who is handling the administration, said 107 proofs of claim had been filed to date, taking the maximum owed by the Blockchain Global to $48.9m.

Another crypto­currency platform, myCrypto­Wallet, collapsed into admin­istration late last week, leaving its users unable to access their accounts.

That outfit deleted its social media accounts this week after reporting by The Australian indicated that customers were claiming up to $50,000 in lost crypto­currency and had been unable to move money out of their accounts – despite the company’s claims that all “pending account issues” had been finalised.

The sole director of myCryptoWallet, Jaryd Koenigsmann of Sunbury, Victoria, declined to comment.

Two winding-up applications were lodged this year against Blockchain Global, which was behind the failed bid to list Bitcoin Group on the ASX in 2016, with the company placed in administration in October. Documents lodged with the Australian Securities and Investments Commission indicate creditors are owed amounts ranging from a few thousand to as high as $8.3m.

Mr Yeo told the Victorian Supreme Court in November that his attempts to ascertain the state of the company’s finances had been complicated by the directors now residing overseas, and the company “is a party to four ongoing court proceedings’’.

One of these relates to the operation of the ACX cryptocurrency platform formerly operated by Blockchain Global, with the claims in that proceeding amount­ing to about $13m and which “include allegations that significant sums of cryptocurrency are unaccounted for’’.

The fact that cryptocurrency identified as belonging to the company allegedly is accessible only via a laptop allegedly stolen from former director Allan Guo – who is the creditor who claims to be owed $8.3m – further complicates the situation.

“Mr Guo confirmed that he had previously had access to the wallet that contained the cryptocurrency displayed in the company’s balance sheet,’’ the court judgment reads. “He informed Mr Yeo’s staff that before the onset of the Covid pandemic, in late 2019, he was in China and his belongings were stolen,” it reads.

“Amongst the stolen items was his laptop, which contained the credentials for accessing the wallet, and therefore the crypto­currency it held.

“Mr Yeo’s staff requested Mr Guo to provide evidence in respect of the alleged theft of the laptop. Mr Guo said he would provide a police report but this report has not been received.’’

Mr Yeo told The Australian that while some of Blockchain Global’s crypto assets had been identified, “further extensive investigations are likely to be required to identify which party has a right to claim the same. Those investigations are complex and, moreover, in their early stages.’

Mr Yeo said it was too early to estimate what return creditors’ might be in line for. “There is no doubt that the recovery of cryptocurrency requires a novel approach compared to most traditional assets,’’ he said.

“It is certainly different to the recovery of funds from bank accounts. That is not to suggest that the recovery of such cryptocurrency is impossible.’’

The company’s former vehicle Bitcoin Group – headed by former Blockchain Global director Sam Lee – lodged a prospectus with the ASX in July 2015 in an attempt to raise $20m.

The IPO was pulled and investors’ money refunded in early 2016.