Israeli Cryptocurrency Exchange Owner Sues Wallet Company for Fraud

Eli Bejerano, CEO of Israeli’s oldest cryptocurrency exchange Bit2C, has filed fraud charges against BT360, a popular Israeli crypto wallet. News of the $500,000 lawsuit first appeared in Globes, Israeli’s leading financial publication.

An Investment Gone Wrong 

According to the suit, Bit2C had been working with BT360 to pilot a Bitcoin account for savings and a loan product. Bejerano alleged that he provided BT360 40 Bitcoins as of 2019 to sponsor the project, and that BT360 has not returned the funds until now.

BT360 mysteriously packed up last month, taking customers’ investments with it, and Bejerano is calling foul to what looks like an exit scam. From details of the lawsuit, Bejerano was supposed to be paid back monthly interest on his investment. Bejerano alleged that his interest was measured manually by employees of BT360 when he placed the money into the savings account in March 2019. However, the payments stopped after three months — and BT360 refused to refund him, he said.

The loan product, judging from Bejerano’s statement, took off for a while. He took out a loan from Bit2C in April 2019, and staked 20 Bitcoin as collateral, but when he repaid it in full in September, he argued in his complaint that BT360 would not return the collateral.

A copy of the filed lawsuit was issued to cryptocurrency new media, Decrypt, and quotes Bejerano as saying that he is a “victim of a pre-planned scam against him.”. It also claims that the stated pilot projects were mere fronts, and that BT360 had no intentions to honor the agreements from the onset.

BT360’s Shutdown Made Things Difficult 

It doesn’t help BT360’s case that it closed operations on February 12, 2020, without prior notice and locked users out of their funds. That was not a very neat move. 

Israeli fintech publication, Calcalist, reported last week that BT360’s former CEO, Erez Fischler, put the blame of the lockdown on his predecessor and owner of the company, Eyal Sadeh. In turn, Sadeh, told Calcalist he had fired Fischler, because of customer funds mismanagement.

Sadeh argued that the lockdown was temporary, and BT360 will resume operations once it gets the all-clear from authorities, following the outcome of investigations into the matter. He also said that clients would be given access to their accounts soon.

According to the Calcalist, Fischler is still answering to about 40 debt claims, some from his former chocolate business that went bankrupt. Bejerano would have none of the blame sharing, however, as both Sadeh and Fischler are listed as defendants to the lawsuit.

Frustrated wallet customers are also having none of the drama, and have been pestering the wallet’s administration to grant them access to their funds. A customer identified as Paz, who was a wallet regular, said about $50,000 of his money is now trapped in BT360. At press time, neither Fischler nor Sadeh have issued any comment concerning the matter.