Orionx Shuts Down After $7M Custody Gap Surfaces, Tether's Backing Under Scrutiny

Chilean cryptocurrency exchange Orionx has suspended withdrawals and is undergoing a permanent closure process after a forensic audit revealed a $7 million gap in its custody wallets. The company, which was backed by Tether's Series A round last year, notified users on September 3 that it had begun the closure process following the discovery of the discrepancy.

The audit found that more than $7 million in custodial assets had been moved out of Orionx's management, leaving over 100,000 users waiting for a restitution plan with no clear payout date. Withdrawals are temporarily suspended to prevent one group of customers from getting ahead of another while the closure process moves forward.

Orionx filed a criminal complaint against two former executives and co-founders, Roberto Zibert and Joaquin Diaz, alleging that they had engaged in acts tied to transfers between 2018 and 2021. The company accused them of receiving millions of dollars in assets from Orionx, but both men have denied any wrongdoing.

The regulatory backdrop is also important: Chile's Financial Market Commission (CMF) said that Orionx SpA is not registered or authorized to provide services regulated under Chile's Fintech Law. This means that customers will need to deal directly with the company and, if necessary, the courts for restitution of their funds.

Orionx's closure plan has been reported to the CMF, but it does not administer the wind-down or have authority to order restitution of client assets. The company's priority is to return as much of clients' assets as possible, but this is not a guarantee of full recovery.