The Australia-based Bitcoin exchange Igot has been struggling to completely deliver on operations with Bitcoins or refund customers their money.
The company was founded in 2013 and offered exchange services in 40 different countries, including the ability to buy and sell Bitcoins, remittance services, futures tradings and merchant services.
However, it is unclear whether the company actually signed up merchants and provided listed services beside basic buy/sell exchange services, as was advertised by the company.
Shady background of Igot Bitcoin exchange
There are certain concerns about the background of the company. It is referred to as an Australia-based company registered with the Australian Securities and Investments Commission (ASIC/ABN: 600 161 233), in Melbourne in June, almost 12 months after it was founded.
In addition to this, there are some questions about the contact address of the company, with the main office listed in Adelaide, and agent offices in Ljubljana, Slovenia; Kowloon, Hong Kong; Singapore and Bangalore, India.
Research by SiliconANGLE showed that these are all virtual and therefore not legitimate offices.
Igot’s main goal was to make operations with Bitcoin easy, simple and safe. So far the company managed to attract attention by being at the center of huge misunderstandings and failing to fulfill its obligations towards customers.
In May last year, the Bitcoin exchange experienced delays for bitcoin and fiat currency withdrawals, which were mainly associated with major platform updates. To calm worrying customers, Igot offered reduced trading fees and other complementary measures.
Later in June, Igot was victim to a Distributed Denial of Service Attack and came under fire once again with dozens of customers and clients complaining about delays with their withdrawals, expressing doubts about the trustworthiness of the company and claiming that they were robbed.
There have been some heated discussions going on on social media, including Facebook, Twitter and Reddit with most users expressing their dissatisfaction about the way Igot is handling the situation.
For instance, a Bitcoin community member who invested a significant amount of money in Bitcoin through the Igot platform says on Reddit:
“Igot is not being honest and transparent. We are given many different reasons and explanations behind the problem that don’t really fit together”.
Commenting on delays with withdrawals, Igot’s founder and CEO, Rick Day, at that time claimed that the situation was under control and there was no reason to worry about company owners escaping with all the investments.
Murky financial performance
In June 2014 a founder of Igot expressed his excitement about an agreement with Jesse Chenard, who was invited to partner with the company as a major investor and company advisor. After a thorough analysis of the company’s finances, Chenard found that Igot was not buying enough bitcoins for the money it was taking in.
Jesse Chenard tells ABC:
“What people thought they had bought with their Australian dollars or Indian rupees, or whatever currency they were dealing in - wasn’t actually bought”.
Soon after Chenard stopped advising for Igot and made a decision not to invest in the company.
For now, Igot has ceased trading with users, and stopped all public communications, whilst not responding to users’ complaints. Was it all a big scam?
From skepticism to enthusiasm and back
With growing interest in cryptocurrencies and rapid development of blockchain technologies underpinning them, skepticism among consumers and financial institutions has given way to enthusiasm.
The European Union recognized it as a currency, Germany classified it as private money, and Finland classified it as a commodity, while technology giant Microsoft started collaborating with a number of banks developing blockchain technology potentially for the use of financial services.
However, innovations carry significant challenges and concerns along with opportunities. One of the most important concerns here is security and trust.
The fall of MtGox has brought some uncertainty as to how reputable exchanges are, and many traders interested in making investments in cryptocurrencies have become very wary of these exchanges. When trusting a bitcoin exchange with money, everybody wants to be sure that their security measures are of the utmost importance.
All Bitcoin exchanges share certain key functionality, however their effectiveness as trading networks as well as the security measures they introduce vary significantly.
Creating a safer environment together
There is very little government regulation around bitcoin and a lot remains to be done in that area. Regulatory discussions around digital currencies have really ramped up during the last few years, and many cryptocurrency experts are positive about further development of regulatory frameworks, which will only help the community’s Bitcoin legitimization efforts and find a balance between risks and business opportunities.
Earlier this month, Cointelegraph spoke with Peter Ohser, EVP of MoneyGram at Europe Money 20/20, to discuss the future of blockchain technology and the contribution it could make in the development of financial services.
He expressed his concerns about the evolution of regulation around Bitcoin and its core technology:
“We still need to be able to have control, visibility and transparency of that throughout the process. The premise of blockchain is open, but the challenge with being open is going against the regulatory regimes and what people are being forced to do at certain levels, so there is a lot of friction right now between those two things”.
Ken Lo, CEO of ANX, a Hong Kong- based financial technology company, says:
“There will become more regulations and many governments will start revealing their stance on how they want bitcoins to be regulated. This will be a bit painful in the beginning, but in the long run it will give a framework for bitcoin companies to work around”.
Frederik Thenault, Founder of iceVault, a Switzerland-based Bitcoin storage, agrees:
“Despite the fact that the beginnings of Bitcoin were plagued with the negative purposes that people could use them for, e.g. money laundering, drugs and arms trafficking,, the vast majority of people want to use it for legitimate reasons. It is now seen as a cheaper, faster way of making payments, and as an investment tool. A reasonable amount of regulation means a safer range of services that can benefit users, especially since some of them have been defrauded from their Bitcoin holdings either through hacking or through misplacing trust in unreliable service providers”.
Further development in the cryptocurrency space demands guidelines and safety guards that reasonable regulations could help foment and protect bitcoin users from the risk of fraud. Cointelegraph looks forward to seeing what the future holds for this emerging sector.