Globix Corporation, a defunct internet service provider (ISP), has been in the headlines again after the liquidators announced they had frozen the company’s cryptocurrency assets worth $2.3 million. The move comes as part of the ongoing investigation into the missing $43 million in customer funds that went missing in 2001. The liquidators are hoping that the frozen crypto assets may hold the key to recovering some of this lost money.
Globix Corporation was one of the largest internet service providers in the US during the dot-com boom of the late 1990s. The company offered web hosting, email services, and broadband internet access to businesses and consumers. However, when the dot-com bubble burst in early 2000, the company began to struggle financially. it finally declared bankruptcy in 2002 after its creditors filed a petition to have the company liquidated.
One of the most significant losses suffered by Globix’s customers was the disappearance of $43 million from their accounts. According to the company’s records, this money was held in a trust fund that was supposed to be used to pay for services used by Globix’s customers. However, when the company went bankrupt, the money vanished, and no one knows what happened to it.
Over the years, there have been several attempts to find out what happened to the missing $43 million. However, no one has been able to recover the money or even find any solid leads. The liquidators, who were appointed to wind up the company’s affairs, have now turned their attention to Globix’s crypto assets.
The liquidators have been working with blockchain analysts to trace the movement of Globix’s cryptocurrency holdings. So far, they have been able to identify several wallets that appear to be linked to the company. These wallets contain various cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ripple.
The liquidators have now frozen these wallets, which are currently worth around $2.3 million. By doing so, they hope to prevent anyone from accessing the funds and to give them time to investigate further. The liquidators are also hoping that these crypto assets may lead them to some of the missing $43 million.
Of course, there are some challenges to this. Firstly, the value of cryptocurrencies can be incredibly volatile, and the value of the frozen funds could fluctuate rapidly. Secondly, it may not be easy to link the wallets to the missing funds, even though they are linked to the company. The wallets may have been set up for entirely different purposes.
However, the liquidators are confident that they will be able to trace the movement of these funds and that they may eventually lead to the missing $43 million. This is not the first time that cryptocurrency assets have been used in such investigations, and it is likely not to be the last.
In recent years, there have been several high-profile cases where cryptocurrency was used to pay for illicit activities or hide stolen funds. However, the blockchain also provides an irrefutable ledger of such transactions, making it possible to trace the movement of funds in a way that was not possible before.
In conclusion, the liquidators’ move to freeze Globix’s cryptocurrency assets is an interesting development in the ongoing investigation into the missing $43 million. While it remains to be seen whether these crypto assets hold the key to recovering any of this money, it is clear that cryptocurrencies are becoming an increasingly important tool in tracing the movement of illicit funds. As such, it is likely that we will see more cases like this in the future, as regulators and law enforcement agencies look to harness the power of blockchain technology to fight financial crime.
Globix, a cryptocurrency trader that collapsed last year, has been the subject of a court order that forces crypto exchanges to freeze digital assets and hand over customer information. The liquidators are searching for $43m of missing funds, which were mostly held in tether, a stablecoin pegged to the dollar. Binance, the world’s largest crypto exchange, was ordered to halt attempts to move assets from Globix-linked crypto wallets, and rival exchanges including Crypto.com, Bitstamp and Kraken were told to reveal identities behind certain crypto wallets linked to the Globix platform. The injunction has raised questions about the effectiveness of Gibraltar’s regulations for crypto, which were passed in early 2018.
Globix was trying to carve a niche in crypto investing by allowing investors to choose automated trading strategies to pick attractively valued tokens, but was caught out by the unprecedented crypto downturn last summer. The majority of Globix’s investors were in Gibraltar, and at least one investor was a sitting member of the Gibraltar Parliament. Some occupied positions of influence in legal and political circles. The failure of Globix calls into question whether the architects of Gibraltar’s crypto ambitions can identify risks to consumers.
Last June, Globix investors were locked out of the system, the same month Gibraltar was placed on a “grey list” by the Financial Action Task Force. Countries placed on this list are identified as having strategic deficiencies in their regimes to counter money laundering and terrorist financing. The Government of Gibraltar said the case “demonstrates the need for firms to be licensed and supervised to provide adequate standards of consumer protection”, which was the “overriding objective” in Gibraltar’s crypto regulations.
Damian Carreras, the company’s sole shareholder and director, is a Gibraltarian citizen. Submissions made to Gibraltar courts claim a Globix funding wallet was active until late September 2022, well after investors were locked out of their accounts, and roughly $18m was transferred to Binance between May 2021 and September 2022. According to two people familiar with the matter, Carreras had been reluctant to co-operate with the appointed joint liquidators, Adrian Hyde, Joanne Wild and Brian Simpson of corporate recovery specialist firm Begbies Traynor. Carreras said he was co-operating with the assistance of legal advisers, and declined to provide more information due to the ongoing legal process.
Financial centres around the world are wrestling with the reputational fallout that comes with controversial crypto collapses. Following the failure of FTX in the Bahamas, and several major crypto firms in Singapore, the issue has become increasingly pressing. It remains to be seen what impact the failure of Globix will have on Gibraltar’s ambitions to be a world-leading jurisdiction that properly monitors digital asset businesses.