Executive Summary
Swiss crypto exchange Lykke has collapsed following a major security breach in June 2024, resulting in the loss of approximately CHF 22.8 million ($22 million) in customer funds. The incident led to the suspension of trading activities, bankruptcy proceedings, and significant financial losses for investors. This report analyzes the events leading to Lykke‘s downfall, the impact on stakeholders, and the ongoing legal actions.
Key Developments
- Security Breach: On June 4, 2024, Lykke suffered a cyberattack resulting in the theft of 158 BTC and 2,161 ETH, equivalent to about CHF 22.8 million.
- Trading Suspension: Lykke immediately halted all trading activities and withdrawals following the attack.
- Bankruptcy Proceedings: In December 2024, Lykke Corp filed for bankruptcy, with its founder Richard Olsen also declaring personal bankruptcy.
- Financial Impact: The stolen funds represented approximately one-third of Lykke’s total assets. Investors are facing potential total losses, with some reporting investments of up to CHF 80,000.
Background and Financial Health
Lykke, founded in 2015 by Richard Olsen, positioned itself as a zero-fee trading platform for cryptocurrencies and fiat currencies6. However, financial reports indicate long-standing liquidity issues:
- No annual reports were published after 2020, raising concerns about transparency.
- The company reported losses exceeding CHF 5 million in 2020 alone.
Richard Olsen, the 72-year-old founder of crypto start-up Lykke, is portrayed as an experienced figure aiming to “reinvent finance.” With a background in currency trading (co-founding Oanda), Olsen has a wealth of expertise to the crypto space. He successfully secured an investment from Swiss publishing house Tamedia. Olsen envisioned Lykke as a global electronic trading platform for diverse assets, emphasizing financial engineering and algorithm-supported cryptocurrency derivatives.
Security Concerns and Speculation
The nature of the security breach has raised questions among investors:
- The attack reportedly occurred in two stages, first transferring funds from partner companies to Lykke accounts, then to external wallets.
- This complex process has led some victims to speculate about potential insider involvement.
Legal Actions and Investor Response
- Criminal Proceedings: A group of affected investors has initiated criminal proceedings against Richard Olsen through the Niedermann law firm in Zurich.
- Civil Lawsuits: Multiple lawsuits have been filed across jurisdictions, including Zug, London, and Vilnius.
- Liquidation Request: A formal request for the liquidation of Lykke Exchange has been submitted in London.
Broader Implications
- Regulatory Scrutiny: The collapse of Lykke may lead to increased regulatory oversight in Switzerland’s crypto sector.
- Investor Confidence: This incident could further erode trust in centralized cryptocurrency exchanges, potentially accelerating the shift towards decentralized finance (DeFi) solutions1.
Conclusion and Call for Information
The Lykke exchange collapse represents a significant setback for Switzerland’s ambitions as a crypto-friendly jurisdiction. As investigations continue, many questions remain unanswered regarding the full extent of the losses and the possibility of insider involvement.
Call for Whistleblowers:
FinTelegram urges individuals with insider knowledge of Lykke’s operations, the security breach, or any related financial irregularities to come forward. Your information could be crucial in understanding the full scope of this incident and ensuring accountability. Confidentiality is assured for all whistleblowers.
