The British Columbia Securities Commission (BCSC) says the now-defunct crypto exchange Einstein Exchange operated as a Ponzi scheme after becoming insolvent in 2018.

The BCSC has disclosed its allegations against Michael Ongun Gokturk, the sole director of three now-defunct crypto companies Einstein Exchange Inc., Einstein Capital Ltd., and Einstein Law Corporation.

In the document, the Canadian securities regulator says that after becoming insolvent in January 2018, Gokturk operated Einstein Exchange as a Ponzi scheme “by continuing to accept deposits and paying out some customers with money and crypto assets drawn from the pooled bank accounts and wallets.”

Despite claims that Einstein Exchange served as a counterparty to customer trades, the BCSC contends that the firm failed to secure corresponding crypto assets to fulfill these transactions.

Moreover, the exchange allegedly manipulated customer dashboards, providing false information that suggested order processing and availability of assets, the regulator says. The BCSC estimates that Gokturk’s actions resulted in a deprivation of approximately $19.1 million for Einstein Exchange’s customers.

Launched in 2017, Einstein Exchange initially aimed at offering a trading platform for various cryptocurrencies. According to the BCSC, at one point, all three companies under the Einstein label collectively held more than $34 million worth of cash and crypto assets on behalf of their customers.

In 2019, the Supreme Court of British Columbia granted the BCSC’s order and appointed the accounting firm Grant Thornton as the interim receiver to assume control of the assets of the Vancouver-based exchange.