Bitcoin owners irked by cash-out delays
Criticism comes as last year’s stratospheric gains made in cryptocurrency markets are erased
Bitcoin investors unable to cash out, or having to wait weeks and longer to get their money, have been complaining about QuadrigaCX, a company founded in Vancouver that is one of the largest cryptocurrency exchanges in the country.
There has also been discontent among users of cryptocurrency exchange services at another Vancouver company, Einstein Exchange.
Exactly why investors haven’t been getting their money as immediately as they should, which is usually around 10 minutes, may be more complicated.
The muddle at QuadrigaCX comes as stratospheric gains made by bitcoin last year are being wiped away and there are more comparisons of it to big market crashes of the past, including the dot-com crash of the early 2000s and tulip-bulb mania in the mid-17th century.
Proponents of bitcoin and other virtual currency trading talk of rapidly improving features and processes that can track and stem fraud, criminal activity and money-laundering, but these risks loom.
QuadrigaCX CEO Gerald Cotten says high Bitcoin prices earlier this year brought “20 times our usual transaction volume,” but he also blames a backlog starting because banks in Canada are cracking down on the bitcoin industry.
“Instead of simply blocking bitcoin companies from having direct bank access, they went after both the customers as well as the payment companies that help facilitate transactions related to bitcoin.”
There are some signs that banks in Canada are grappling, at least, with the popularity of the market.
Late last week, BMO said it will no longer accept the buying of Bitcoin and other cryptocurrencies or virtual currencies with its debit or credit cards, following a similar decision by TD Bank in late February. Other major Canadian banks such as Bank of Nova Scotia and RBC have said they are reviewing their policies.
Bitcoin exchanges in Canada also
rely on different payment processing companies to manage incoming and outgoing funds because the banks don’t work with them.
There was a big snag when, according to Cotten, CIBC froze $30 million in funds held in the account of a payment processing company that QuadrigaCX uses.
Cotten says there has been no explanation by the bank for holding the funds. CIBC declined to comment on the alleged claims.
Cotten said a separate set of funds held by another bank for about a month in the account of a payment processing company was released two weeks ago, which has allowed more QuadrigaCX investors to receive their payments.
At one point, however, QuadrigaCX was having to re-send some 2,500 payments that couldn’t be
made immediately. Currently, all but around 70 have been sent, says Cotten. In usual times, he says the company sends approximately $1 million to $2 million a day in outgoing payments.
One investor decided to buy bit-
coin via QuadrigaCX after hearing about the wild gains made by “a guy I met at a wedding.”
He declined to have his name used but told Postmedia he has been waiting for more than 60 days to receive $13,000 already shown to be debited from his account.
Others have taken to Reddit’s online forums and to the media to grumble about larger sums of money owed for much longer. Some have been reaching out for help or to contribute to the sleuthing and sharing of some basic information because they can’t easily figure out basic information such as the company’s address, where it’s registered, and who runs it.
(QuadrigaCX’s website says it’s located in Vancouver. Cotten said they have moved to Toronto.)
In China, which had been the larg-
est bitcoin market, government officials largely banned trading and halted the bitcoin market there by the fall of 2017. Trading has since shifted to Japan and Korea.
The Canadian market is considerably smaller and has been known for being more lightly regulated, though the move by banks to curtail buying bitcoin with credit cards follows similar action taken by several major U.S. banks in February.
The Office of the Superintendent of Financial Institutions or OSFI, which regulates banks in Canada, said it hasn’t issued any specific guidance for cryptocurrencies.
“We expect federally regulated financial institutions to be aware of the risks of engaging in such areas and to take appropriate measures if they deem (activities) to be too risk.”