Hong Kong-based cryptocurrency exchange BitForex has faced a complete blackout since suspending its website and trading application on February 23.
Users have been unable to initiate withdrawals or access the exchange, which previously boasted over $2 billion in trading volume as of February 24.
Before the halt, approximately $56 million in cryptocurrencies had been withdrawn from the exchange’s wallets, and attempts to access the BitForex website blocked users from accessing the platform.
BitForex Users Left in the Dark as Withdrawals Halted Following Outflows Worth $56.5 Million
Seeing some suspicious activity with the crypto exchange @bitforexcom.
On Feb 23 their hot wallets saw outflows of ~$56.5M. Shortly after this time withdrawals stopped processing with no official announcements having been made since.
Currently users are asking questions on… pic.twitter.com/gFEcwExHKh
— ZachXBT (@zachxbt) February 26, 2024
On February 23, crypto investigator ZachXBT reported approximately $56.5 million in outflows from three of BitForex’s hot wallets.
After that, withdrawals were halted without official communication from the exchange.
It remains unclear whether the withdrawal of funds from BitForex’s hot wallets resulted from a hacker attack or if the exchange voluntarily halted withdrawals.
BitForex has yet to issue official statements regarding the situation, raising concerns about the project and leaving users in the dark.
Further scrutiny of BitForex’s holdings reveals concerning details, with the exchange holding a significant portion of TRB and OMI token supplies, precisely 18% of TRB and 7% of OMI.
However, BitForex’s X account has not been updated since May 2023. Also, BitForex’s official Telegram channel remains inactive, with one admin deleting their account and others failing to respond to posts since at least February 21.
Users on the exchange’s official Telegram channel have reported various issues with their accounts, including difficulties logging in and encountering empty dashboards.
Some users have even shared screenshots indicating they have been blocked from accessing the company’s website.
At the time of writing, BitForex has not provided any information or responded to users on Telegram, contributing to the growing uncertainty surrounding the exchange’s operations and the safety of user funds.
BitForex Faces Scrutiny Amidst Leadership Change and Decreasing Trading Volumes
The timing of CEO Jason Luo’s departure, announced in January, has raised suspicions, especially considering the lack of response from the exchange regarding recent issues.
Users seeking answers via Telegram have been met with silence, further exacerbating concerns about the exchange’s transparency.
CoinGecko data indicates a significant decrease in trading volume from $2.5 billion to $1 billion between February 22 and February 24 before leveling off.
However, normalized data suggests the exchange may have inflated its volumes by up to 100 times. Normalized data takes into account web traffic statistics when considering trading volume, which was reported at just $25 million on February 22.
On-chain activity for the exchange’s native BF token has been limited, with minimal movement within 11 days. The last update to CoinmarketCap’s data for the exchange was over 65 hours ago. The latest update shows approximately $280 million in Ethereum trading volume, and about $175 million in Bitcoin trading volume.
The combination of abrupt leadership changes, decreasing trading volumes, and limited transparency from BitForex has led to doubts about the company’s stability and reliability.
Users and observers are increasingly concerned about the safety of their funds and the future of the exchange amidst these uncertainties.
Recently, the Securities and Futures Commission (SFC) of Hong Kong issued a warning to crypto investors, urging them to utilize only licensed trading platforms and verify the regulatory status of the exchanges they are trading on.
This warning comes as the deadline for virtual asset trading platforms based in Hong Kong to submit their license applications draws near.
Platforms must submit their applications by February 29, or cease operations by the end of May if they fail to do so.
Currently, only OSL Digital Securities and Hash Blockchain are licensed virtual asset trading platforms in Hong Kong.
However, there are 14 entities on the list of applicants, including well-known names like OKX, HKVAX, Bybit, and DFX Labs.
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