Clients fear losses as local crypto exchange iCE3 faces liquidation

Crypto exchange iCE3 posted an announcement on Monday that it had been “advised to initiate liquidation proceedings” after suspending all trading on the exchange in March following the discovery of account discrepancies.

It has also suspended the withdrawal of client funds. This comes just a week after informing clients that it would process withdrawal requests for all cryptos and rands, with the exception of bitcoin and litecoin.

Several iCE3 clients said their requests for withdrawals have not been processed. On Monday, they were greeted with a terse announcement that the company would suspend all withdrawals and initiate liquidation proceedings.

It remains unclear why all but bitcoin and litecoin withdrawal requests were processed, as these are likely to make up the bulk of cryptos held in client accounts on the exchange.

One iCE3 client, who asked not to be named, said he has been trying for several weeks to withdraw his crypto, to no avail. “Until Monday, I was receiving communications from the company and was told my request for withdrawal was in the queue. Then suddenly things went quiet when the company posted a message saying that withdrawals had been suspended and the company was going to be put in liquidation.

“I’m worried that I am going to lose what I have built up in my account.”

‘Abdicated their responsibility’

iCE3 removed its Facebook presence, resulting in clients launching their own Facebook page to post updates and share information. “Since the ICE3x management have abdicated their responsibility in managing the narrative around this issue, this page has been created as a hub for people to share strategies about the way forward and status updates around the problems we face with the failures at their exchange,” says the welcome message on Facebook.

iCE3 founder Gareth Grobler did not reply to questions seeking clarification by the time of publication.

Though iCE3 is reckoned to have about 80 000 client accounts, a small percentage of these are active, making it a relatively minor player in the local crypto space.

The reasons given for the suspension of trading on the exchange in March were an apparent dispute with Austrian technology partner Merkeleon.com and its subsidiary Coinspaid.com.

The company appears to have harmed itself with its public admission in March of account “discrepancies in the balances pertaining to bitcoin and litecoin” — prompting a rush by clients for the exit door.

The statement by iCE3 in March reads: “On the advice of our legal and auditing team, we have suspended all deposits and trading. Furthermore, we have suspended BTC (bitcoin) and LTC (litecoin) withdrawals with immediate effect, pending the outcome of a full investigation and reconciliation. This is being done for the protection of all clients.”

iCE3 clients whose funds have not been paid out are now concerned that their fate lies in the hands of the liquidators, and it may take years before they know whether they will receive anything back.

iCE3 was established in 2013 and was one of the oldest exchanges in the country. The failure of a crypto exchange in a sector endeavouring to build public trust has been met with alarm by some in the industry.

“It is obviously very unfortunate to hear of the closure and liquidation of any crypto exchange,” says Farzam Ehsani, founder and CEO of crypto exchange VALR. “I’m not aware of the details of what has happened, but I hope that a favourable resolution can be found for all parties involved.”

• This is a developing story
• This article was originally published on Moneyweb and is used here with permission

Now read: South African firms start investing their cash in bitcoin