CAVirtex: Scam in the Making?




CAVirtex Trouble

CAVirtex is Canada’s oldest and most well-known Bitcoin exchange, founded in 2011. For a while, they were the only exchange option available to Canadians, until QuadrigaCX rose to challenge them. Other newcomers such as the Taurus Bitcoin Exchange now offer significantly lower fees, but CAVirtex maintains the largest volume by far.

As a result, CAVirtex remains the exchange of choice for those buying or selling in large amounts. They’re also on good terms with Canadian regulators, and are one of the primary lobbyists for Bitcoin in the country. Their former CEO even presented at a Canadian Senate hearing, which culminated in them being the first government body to publish a report on the blockchain.

All has not always been well at CAVirtex, however. The former CEO goes by Joseph David in the Bitcoin community, but his legal name is Joseph Toth according to official documents. Various Internet sleuths have discovered that his listed addresses are a UPS store and a mall, and that he is an accused scam artist. Until at least 2008, for example, he operated Hedge for Profit, which claimed to make you 87% of your investment but obviously did not.

It was around the time of these allegations that Canadians began to question CAVirtex. Near the end of 2014, CAVirtex was delisted from Havelock Investments at its highest recorded share value. Since Havelock was the only effective means of buying and selling the virtual shares, this basically forced investors to become permanent shareholders. CAVirtex offered to buy the shares back at $30 apiece–a roughly 80% loss–resulting in an attempted class action lawsuit.

Eventually, Joseph stepped down as CEO, but the problems just continued. CAVirtex ran into conflict with its banking partner; at the same time, their security system was compromised by hackers, who managed to get many users’ password hashes and other authentication factors. As a result, the exchange had no choice but to shut down.

No notice was given to shareholders as to what the closure meant for them. This caused an outcry on Coin Forum, Canada’s largest online forum for cryptocurrency enthusiasts. One investor started a thread about the issue, which has gathered over 700 views and counting–quite substantial for a Canadian-only message board.

The company was thereafter purchased by Coinsetter, who provided the quick influx of capital necessary to resume operations. This did nothing to appease shareholders, however, who were left wondering what stake they have in this new corporate entity. A representative posted briefly in an effort to alleviate their concerns, and an email was sent out, but over 7 months have passed without a resolution.

The exchange is currently operating as normal for traders, but the drama rages on at Coin Forum. Numerous investors have registered accounts in an attempt to make their voices heard, and while it’s likely some form of resolution will be reached, we recommend that all CAVirtex shareholders do the same in order to help guarantee a fair return on their investment.

SUBSCRIBE TO OUR NEWSLETTER

Read previous post:
Buying Bitcoins
Why We Should Use Bitcoins

Thank you for taking the time to read my post. Bitcoin is a pretty new type of currency which is...

Close