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Bitcoin investors 'owed thousands' by struggling Australian exchange -

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MARK COLVIN: A global bitcoin exchange operating in Australia appears to be on the verge of collapse.

Igot, as the company's called, has hundreds of thousands of dollars worth of debts which it can't pay.

Dozens of customers have been waiting in some cases six months and counting to get their money back.

A bit like a foreign currency exchange, Igot was supposed to take your money and turn it into the computer currency bitcoin.

The problem is that some customers haven't been able to get all their money or bitcoins back from the company.

National technology reporter Jake Sturmer has the story.

JAKE STURMER: Bitcoin is supposed to be the new digital global currency that's virtually fee-free to transfer with the value sent to your computer's wallet almost instantly.

You can use the computer currency to buy items online, with major companies like Microsoft now accepting them.

To get bitcoins, the easiest way is to go through a bitcoin exchange, buying bitcoins like you would US dollars.

But for dozens of the users of the Australian-founded Igot exchange, the process has been anything but instant. And the frustration of trying to get the money or bitcoins back is mounting.

AKRAM BEKZADA: What I've got left in there is in the vicinity of $15,000, and I've been waiting on it since October 26, 2015.

JAKE STURMER: That's Akram Bekzada; one of the several customers the ABC has spoken to who are waiting to get their money back.

AKRAM BEKZADA: It usually starts with 10 business days. They start telling you, "Oh, it's coming soon, don't worry," and then he'd start giving you more promises.

JAKE STURMER: Igot was founded in Australia in 2013 by Indian-born entrepreneur Rick Day. Shortly after, he moved to New York to expand the business.

That's where he met US entrepreneur Jesse Chenard who came on board as an advisor to the company, lured by the excitement of the emerging technology of bitcoin.

The ABC has spoken to Mr Chenard who says he heard alarm bells once he dug deeper into the company's finances in 2014.

JESSE CHENARD: I think at that time it was insolvent but because he claimed to have other assets and because everything was murky and in his name and what have you, he claimed that he was able to cover it and that it was a small, you know, accounting thing. So I would say that the balance sheet looked pretty crappy.

JAKE STURMER: That's a claim Rick Day denies.

Jesse Chenard never invested in Igot and went on to start his own business involved in the technology that underpins bitcoin.

Rick Day, now living in Mumbai, told the ABC in a phone interview they had a falling out because he wouldn't give Jesse Chenard enough equity in the company.

Because of the phone line quality, we have had to revoice parts of this interview.

(excerpt from interview with Rick Day)

RICK DAY (voiceover): He sat us down and he saw our systems worked and then he went and started his own thing. So as far as Jesse Chenard is concerned, I am making no further comment.

JAKE STURMER: Rick Day told the ABC that there had been problems, but maintained the company was solvent and everybody would get their money back.

He put the problems down to bank delays, system errors and attempts by hackers to clog up his network.

RICK DAY (voiceover): I know you're concerned about the customers. We are a start-up, we are not some Ponzi scheme start-up for some company that just takes money and runs away. Who would do that and why would I do that?

JAKE STURMER: Akram Bekzada is still waiting for his money though Igot's system declared the transaction complete weeks ago.

Despite asking for help from the Australian Securities and Investment Commission and the ACCC (Australian Competition and Consumer Commission), Akram Bekzada has been told there's little that regulators can do.

AKRAM BEKZADA: They should really be ahead of their game. I mean bitcoin is now traded in billions of dollars, so a currency or a kind of trade this big should gain more public attention and draw proper regulations in order to secure peoples' assets and hard-earned money.

JAKE STURMER: Dr Philippa Ryan, who's a barrister and a bitcoin academic, believes that while regulators are trying to work out the best way to deal with the computer currency, exchanges should set up a code of conduct.

PHILIPPA RYAN: As always, the law is really struggling to keep up with innovation. And that's not a new problem; it's just a bigger problem than ever.

MARK COLVIN: Bitcoin academic Dr Philippa Ryan ending Jake Sturmer's report.