Canadian Bitcoin Exchange CAVIRTEX Shuts Down Due to Security Issues

CAVIRTEX, the first and one of the largest Canadian bitcoin exchanges, has announced that it stops carrying on an active Bitcoin business and will shut down operations in March.

Photo: TheSometimePhotographer/Flickr

Photo: TheSometimePhotographer/Flickr

On February 15, Canadian bitcoin exchange CARVITEX published an announcement saying that deposits and withdrawals were disabled, but all customer funds were safe.

Two days later, the above-mentioned exchange announced its closure saying that the company “intends to cease carrying on an active Bitcoin business and will be winding down its operations in an orderly manner. ” As a result, no new deposits will be accepted by the exchange and all customer funds will be returned. CARVITEX claimed that they maintained 100% reserves.

The company’s news page stated that the team found reason to believe that an older version of the database, including 2FA secrets and hashed passwords, may have been compromised. The database did not include identification documents.

Still, the company cannot be certain of the confidentiality of account information. Kyle Kemper, VP Business Development at CAVIRTEX, asked users to change their passwords, update withdrawal balances on the website, and clear CAVIRTEX browser cookies as well. BTC and LTC withdrawal will remain temporarily disabled.

The company’s clients are able to send withdrawal requests till March 25, 2015. Trading on CAVIRTEX is to stop on March 20, 2015.

Looking back at 2013, when the exchange held a virtual IPO, Mr Kemper said in response to shareholders who asked what was to become of their investment that the company would be operating with shareholders in mind. However, some people suspect that the value of those shares is likely to be impacted as the exchange shuts down.

Regarding other reasons of closure, the exchange said that there were problems with its banking partner. The name of the bank wasn’t announced,  but it was stated that the costs of providing the service proved difficult in the long-term and could not be made sustainable.

It’s worth mentioning that Canadian regulatory authorities enacted new regulations that will require all Québec domiciled cryptocurrency ATM operators and virtual currency exchanges to be licensed.

Still, The Autorité des marchés financiers (AMF) says that it is not attempting to regulate the Bitcoin industry. Anyway, the AMF stated that “Bitcoin carries with it very serious liquidity and volatility risks and that the digital currency is likely to be used by Ponzi scheme operators and other criminal activities,” reports CoinBuzz.

At the time, CAVIRTEX expressed concerns related to the fact that the AMF’s mandate “is potentially very troubling for the future growth of digital currencies in Canada.”

The Canadian bitcoin market has lost its largest market place and while there are some other exchanges that continue functioning in Canada, CAVIRTEX  closure leaves the field open to new businesses in this area showing that there is always room for improvement.

Share This article

We welcome comments that advance the story directly or with relevant tangential information. We try to block comments that use offensive language, all capital letters or appear to be spam, and we review comments frequently to ensure they meet our standards. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Coinspeaker Ltd.