It was rumors at first. It isn’t anymore.
It is now confirmed that Igot.com, a Bitcoin exchange headquartered in Australia with three other regional offices around the world, is having cash flow difficulties and customers aren’t sure whether they will get back the money they invested through the company.
For several days now, a login to the exchange’s site has presented the following notice;
“We’re now processing withdrawals in phases. We have completed about 40% withdrawals this past week and will be processing more this week. If you have a pending withdrawal, it will be processed soon.”
“I am well aware that customers are affected, and customers are really unhappy with this,” Rick Day, who is the Founder and CEO of Igot, has told ABC, “but I would like to show each and every one that we have not lost their money. We have not run away with anything, and we will return the money.”
Even so, few customers are confirming making any progress in withdrawing their money. And as expected, there is a lot of outrage and anger from them. Some have taken to online forums to vent this frustration.
A difficult moment for customers
“Igot.com is scam business. Only invest in it if you don’t want to see your money again,” One particular user has posted on Igot’s Crunchbase page, “you beg for your own money and even if you are sick or dying, they won’t send it.”
Another customer, Zhenya Tsvetnenko, who is owed $180,000, has apparently chosen to take the matters to court hoping Igot will be compelled to pay up.
And a few others have resorted to lodging complaints with regulators in Australia.
Perhaps we should clarify at this point that despite Igot seeming to be our competitor, we do not derive any pleasure from the misfortunes befalling it. If anything, we are concerned that as they go bust, our industry is getting bad publicity.
Of the most concern are those who don’t understand Bitcoin and cryptocurrencies well. They will easily be swayed away from the entire Blockchain technology by stories of people losing their money in Bitcoins.
We also believe it is important to know that Igot.com has a risky business model, and indeed, those of many other bitcoin exchanges. Holding customer funds is a major security flaw, leading to insolvency, systemic risks and higher likelihood of fractional banking. Bitcoin companies who hold consumer funds have a much higher probably of failure.
The lesson: Do not hold customer funds
Igot.com bought and sold bitcoin on behalf of customers while keeping the funds in the company’s wallets and accounts. As a matter of fact, allegations have been reported that the company did not use all the money it collected to buy bitcoins for clients.
“What people thought that they had bought with their Australian dollars or Indian rupees or US dollars or whatever currency they were dealing in — they hadn’t been actually bought. It hadn’t been bought for them,” Jesse Chenard, an American entrepreneur who was Igot’s advisor has told ABC.
In contrast, Buyabitcoin.com.au doesn’t hold consumer funds. We give you access to bitcoin liquidity on overseas markets instantly when you want at a fixed price.
Therefore, we are not controlling customer funds. We hold liquidity on multiple bitcoin suppliers, which we then provide to a customer. We make our own liquidity available, we do not hold funds on behalf of customers.
We look forward to an amicable resolution of the Igot’s cash flow challenges. Meanwhile, we advise bitcoin users to always personally hold their funds, and understand there is always a risk when you trust a third party with your bitcoins.