Switcheo, NEO’s First Decentralized Exchange, Lists 19 ERC20 Tokens

Colin Muller

Switcheo, a NEO-based decentralized exchange (DEX) launched earlier in the year, has added 19 popular Ethereum-based ERC20 tokens to its platform forming new trading pairs, the exchange recently announced on its Medium blog.

This news makes good on Switcheo’s earlier announcement that it would begin supporting ERC20 tokens, which CryptoGlobe reported on in September. The Singapore-based exchange now offers 44 exchange pairs in total, paired against NEO, GAS, its native SWTH token, and ETH tokens, according to data from CryptoCompare. The new listings follow on the launch of the inital Ethereum integration, only weeks ago, dubbed Callisto.

Although moving a respectable $2 million worth of daily volume back in April when the DEX first launched, Switcheo is now posting a paltry $82,000 in daily volume, perhaps reflecting the leaner times hitting the cryptoasset industry during 2018. Most of the tokens listed are on the newer/smaller side - but there are a couple of bigger names such as Kyber Network token (KNC), NEO itself, and the fairly new USD Circle (USDC) centralized stablecoin.

Switcheo does not have any know-your-customer (KYC) requirements. A rival ERC20 DEX, IDEX, was recently accused of implementing such policies, although there is apparently no evidence to support this accusation.

DEXs On Notice

The biggest bombshell in the DEX space as of late must be the US Securities and Exchange Commission’s (SEC) prosecution of the creator of one of the oldest Ethereum DEXs, the no-frills EtherDelta exchange. The charge was operating an unregistered securities exchange, as some ERC20 tokens were considered such.

Zachary Coburn, the founder, settled and paid nearly $400,000 in fines to the SEC without admitting guilt, which was received by some as a controversially chilling message to DEXs.

A recent innovation concerning the DEX space is the Wrapped Bitcoin (WBTC) project, which utilizes Kyber Network functionality to join bitcoin and Ethereum tokens in a smart contract so as to allow bitcoin to be traded on Ethereum-powered DEXs.

CryptoGlobe conducted an interview with KNC CEO Loi Luu last month, where he said WBTC would bring the “best of both worlds: bring the most popular cryptocurrency [BTC] to Ethereum and allow it to be programmable….”

QuadrigaCX Co-Founder Traded Away Users’ Funds as Sole Operational Director: Report

  • More than $220 million worth of users' funds absconded-with by QuadrigaCX co-founder
  • Stollen funds used for trading on "competitor exchanges" - for a loss

Reportedly deceased QuadrigaCX co-founder Gerald Cotton withdrew customers' funds to trade on both spot and leveraged margin exchanges, incurring significant losses in the process, alleges the latest public report on court proceedings surrounding the incident.

The report, the fifth commissioned to the global accountancy firm Ernst and Young (EY) by the Supreme Court of Nova Scotia, found that a vast sum of cryptoassets were transferred from QuadrigaCX exchange wallets to wallets operated by “competitor” exchanges and controlled Cotton, between the period 2016-19. The vast majority of the transfers occurred under Cotton’s alias “Chris Markay.”

Specifically, 9,450 bitcoin, 387,738 ether and 239,020 Litecoin were said to be transferred from QuadrigaCX in this way, and the questionable transfers resulted in “overall trading losses” trading on both spot and margin exchanges.

An additional sum of 21,501 bitcoin was also transferred to an exchange wallet controlled by Cotton, although it is unknown precisely how much of this sum originated from QuadrigaCX wallets. The proportion is unknown because the wallet is held in an offshore location not obliged to comply with EY’s requests for full accounting details. EY added however, that this information has been given to law enforcement of the unspecified jurisdiction.

 

 

EY also claim that Cotton traded on QuadrigaCX itself, using what were likely false deposits of fiat currency to buy cryptocurrency on the platform and counter-trade customers. About 300,000 trades were made from these “unsupported deposits,” which helped beef up QuadrigaCX’s trading volume and trading revenues.

The EY report outlines some generally poor practices that seem to have enabled the scandal, includin poor Know-Your-Customer (KYC) standards enforced on the exchange, which enable the easy exploitation of the platform; no separation between users’ wallets and the exchange’s wallets; and a “significantly flawed” financial reporting and operational control operating infrastructure, which EY claim were largely directed by Cotton alone and in which “typical segregation of duties and basic internal controls did not appear to exist.”

An Unpaid Bill

The QuadrigaCX story has been so big as to make it to non-crypto media in Canada. It has recently been reported by the CBC that Cotton’s alleged exploits have left former customers in the lurch, to as much as $250 million (Canadian) of unreturned funds.

EY claim that roughly 76,000 users’ funds are stuck in limbo as, in effect, unpaid IOUs, and confirm a figure of $214.6 million CAD remains unpaid.