Clean-up continues this week at Cryptorush, dubbed by critics as “The Mt. Gox of altcoins.”
The exchange, after losing up to 950BTC and 2500LTC in March, issued a “Debt Management Plan”
on April 18 which outlined future plans and potential refunds for customers whose coins were lost.
While the numbers are smaller and the outlook slightly less dire than Mark Karpeles’ meltdown, the sequence of events at Cryptorush over the past months is fraught with confusion, apparent loss of control and accusations of fraud.
According to DogeyMcDoge, Cryptorush’s nightmare began on 11 March, when “something bad” had happened, as he or she was then told. It later transpired that the company had lost huge sums of Bitcoin and Litecoin, either due to hacking or wallet bugs which reportedly allowed users to spend more than they had as their balance by using others’ funds.
Controversy deepened when Cryptorush issued IOUs in the form of shares in the company which would be given to customers who faced losses, effectively transferring the debt to them. What’s more, the owner of Cryptorush, known as fyrstikken, announced he would have a 60% share – according to DogeyMcDoge who added he had been told that in reality this was 10%.
An insolvent exchange issuing its own private currency sounds dubious enough, but the company’s PR record made the situation that much worse.
Records have been leaked of threats made by fyrstikken to a party known as rat4, creator of Blackcoin, whom fyrstikken blames for causing instability on the Cryptorush exchange. Fyrstikken’s messages to rat4, too unsavory to be reprinted here, caused potentially irreparable damage to the exchange’s public image.
A predictable swell of PR outreach on Twitter then ensued, with an update from Cryptorush on April 3 stating, “Trust is earned, not given, and we *will* earn back your trust”.
The Initial Way Out
According to the debt management plan, users’ old wallet balances will be frozen and converted to BTC and LTC, which will then be paid to users at values determined via “a transparent process.” The whole wallet system will also be re-launched with zero balances and a figure for each customer showing what is owed to them.
Additional security features will also be built in, tests on which will be executed by third-party firms, according to Cryptorush’s plan.
Meanwhile, the community is skeptical, but not entirely pessimistic. Reddit users
were of the opinion that Cryptorush “isn't a ‘scam exchange’, it's just really, really, really badly designed”
, one even drawing comparison between DogeyMcDoge’s confession (“My hands shake as I write this”
) and a similar statement published
by administrator Defcon when Silk Road went down in February (“I am sweating as I write this”
Frivolities aside, however, the outcome of this rebuilding process at Cryptorush could be significant. While the amounts involved are small compared with Gox, and the backlash hence more manageable, a scenario in which Cryptorush restores order and redeems itself, while unlikely, would be an interesting development drawing much attention.
The CoinTelegraph will continue to report on the situation as it unfolds.