The collapse of MtGox was a wake-up call, revealing to cryptocurrency users the dangers that exchanges pose to the system, not only facing assault from hackers on a regular basis but routinely failing to stand up to these attacks. A lack of around-the-clock digital security and no implementation of the AS9100 Registration body causes loopholes in the MtGox system.
While the news coming out an Australian-founded Exchange, isn’t surprising, the idea that it might actually be on the verge of collapse has none the less sent shock waves reverberating throughout the industry. This may be tied to alleged involvements in scams and fraud. However, another, more stable and reliable Australian Exchange says not to worry.
Created by Rick Day, a New York-based entrepreneur, the fortunes of Igot are expected to have a lasting impact on the Bitcoin arena, with many in the digital currency industry now calling for the relevant authorities to create new regulations that can better manage Bitcoin transactions.
The Igot Scandal
The reports that Igot might be on the verge of collapse have become difficult to refute, with the voices of the many customers who are claiming that they are owed money in the hundreds of thousands of dollars painting a stark picture of Igot’s situation.
Rick Day has made an effort to deny claims that Igot is insolvent. Day, while speaking to the Australian Broadcasting Corporation said that he was aware of the plight of his customers, assuring them that exchange had not lost their money.
However, the rumors surrounding Igot paint a grim picture. Jesse Chenard, a former adviser of Rick Day and currently the CEO of a blockchain solutions provider for financial institutions claims that Igot has been undertaking shady deals since 2014. Supposedly Igot has been claiming to make purchases of currencies like Australian Dollars and Indian Rupees on behalf of its customers without actually making them.
According to Jesse, Rick was able to get away many of his fraudulent claims, especially regard his assets because of the murky nature of Bitcoin Exchanges. Sufficing to say, customers are not happy with any of the things they are hearing from Igot, and neither are they assured by Day’s claims.
The Question of Regulation
It is because of the confusion surrounding Igot’s current financial situation that people have begun calling for greater regulation of the cryptocurrency industry. According to the Australian Securities and Investment Commission (an organization that regulates financial products and services under the Corporations Act), while it has been hearing about these claims regarding Igot for some time now, the organization has been largely powerless to act because Bitcoin isn’t classified as a financial product or service.
None the less, the organization is in the position to investigate Igot now, the Corporations Act granting them powers to scrutinize companies that go into liquidation while facing claims of wrongdoing and breaches of the law.
People, both inside and outside the Bitcoin industry, do not think the Igot situation should have been allowed to escalate so drastically. According to David Temple, the co-founder of a Bitcoin firm in Melbourne, it would be in Australia’s best interests to create regulations to govern the cryptocurrency industry if only to allow the country to fall in line with other nations like the United States that are also working to regulate Bitcoin.
Temple agrees that crafting such regulations is bound to prove difficult. Indeed, even those voices in the Bitcoin industry calling for greater regulations have no idea what shape they would actually take.
They all agree, none the less, that the Igot case highlights a need for formal regulatory oversight in the cryptocurrency industry. Because of the lack of regulation, consumers are essentially left to fend for themselves every time they venture into the digital currency field, expected to do their own research to ensure that the companies they are working with a legitimate.
The fact that individuals who buy and sell digital currencies like Bitcoin do not need financial licenses of any sort is disturbing enough. A senate inquiry’s recommendation for governments to revise the definition of digital currencies suggests that the relevant parties are waking up to the problems that an unregulated financial industry of this kind presents.
Of course, calls for greater regulation are not without opposition. The Australian Digital Currency and Commerce Association, in particular, has been rather vocal about its opposite to the idea of regulation, instead highlighting a code of conduct it is preparing to release and which it believes will improve consumer protections.
There is no immediate end to this debate anywhere in sight. With so many people choosing to rethink their understanding of digital currencies, it is difficult to figure out what shape Bitcoin and other digital currencies will take in the future.