Small Canadian exchange was an “Exit Scam” in the making

  • By Tom Cleveland

  • November 16, 2018
  • 2:40 am BST

Fraud never sleeps, a simple phrase some use to remind themselves to always be wary of financial service providers on the Internet. Canadian crypto investors that had been duped to trust the MapleChange crypto exchange website are now out to the tune of $6 million. This example of a simple con job should serve as a reminder that, unfortunately, the criminal element of our society is just as fond of anything crypto as most every crypto enthusiast and zealot out there. One of the oldest “broker ploys” around takes your deposits, then disappear with the cash. It has happened so frequently of late that the fraud has earned its own title – “Exit Scam”.

Like it or not, until there is a proactive regulatory oversight in our industry, we will be hounded by fraudsters plying their trade at every point of contact in the crypto world. The same was true in the early days of retail forex trading, but that was twenty years ago. Today, the “Wild, Wild West” applies to cryptocurrencies in all shapes and sizes, and, while times have changed, the conman’s tricks have been updated with the latest technology. Clever visuals, sophisticated websites, and falsified accounting reports are the modern stock in trade, along with the aggressive use of social media to trick the young and unsuspecting.

Today’s story of deceit began in Alberta, Canada. Per one report: “The exchange, MapleChange, opened in May and listed 62 tokens, including Bitcoin, Litecoin, and Ethereum. Volume was modest, peaking at $67k, but there were enough regular users to amass a healthy balance sheet.  Users were questioning MapleChange’s legitimacy as early as June.

And then the fateful tweet from the so-called management team surfaced: “Due to a bug, some people have managed to withdraw all the funds from our exchange. We are in the process of a thorough investigation for this. We are extremely sorry that it has to come to end like this. Until the investigation is over, we cannot refund anything.” A later communiqué stated that the exchange had no money and could not refund anything. Supposedly, 913 Bitcoins, valued at $6 million, had been hijacked by hackers, an obvious cover story to hide the “Exit Scam” in progress.

This fraud may seem to be very small, compared to some other well-documented Exit Scams that have resulted in investor losses in the hundreds of millions in U.S. Dollars. One example was the Vietnamese PinCoin, where $660 million vanished overnight. In this case, an exchange was not involved. Avoid small, unregulated exchanges. It is always best to go with an established exchange.