BitForex, an exchange that used to be one of the leading crypto exchanges, has gone under after allegedly disappearing with at least $57 million in customers’ funds.
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A few days before the Hong Kong-based exchange’s disappearance, it published on its now inaccessible site that its CEO and co-founder Jason Lou stepped down as CEO.
Background
On February 23, 2024, when some BitForex users were unable to access the app or their wallets, they thought it was a server issue, unfortunately, it wasn’t about the server. Bitforex management shut down without warning, raising questions among users about being scammed.
A user says:
“It literally just blacked out of nowhere and no one can access their wallets. Basically, everyone lost their money.”
Why I consider it another exit scam
There have been several crypto exit scams since Bitcoin became popular. CoinField, Bitsen, YellowMoon Exchange, FinexBox (a centralized exchange), and Vero Exchange all exited the crypto space disappearing with their users’ funds.
Here are some of the reasons why BitForex may be another exit scam:
Suspicious withdrawal of Nearly $57 million
BitForex is a centralized exchange, giving top management access to users’ funds. After they blocked all users from accessing the exchange, a suspicious withdrawal followed on the same day (February 23), according to 2D Detective @zachxbt, where it says $56.6 million were transferred to three different wallets.
Admins told packaged lies
A week before the total irresponsive of the team behind the exchange, spreads and volume were off. Also, admins in the Telegram Group @BitForexEnglish resorted to half-truths, telling users that they were undergoing maintenance.
Blocked users from its site
At the time of publication, all users have been blocked from accessing the Bitforex website. When we tried to access the website, we saw the following message:
And there is no official communication to the users if it’s maintenance or something beyond the control of the management, at least to assure users of the safety of their funds.
‘Shutdown’ communication channels
But by February 23, all the admins went mute, and some of them changed their names and usernames on the platform. And no one gave any form of assurance or responded to the complaints any longer.
@bitforexcom last tweet was February 21 and despite a series of complaints on the page, the crypto exchange has not responded to any.
Ignored users’ concerns
To make the tense situation worse, the exchange has failed to respond to concerns raised by its users, who are unable to access their accounts, with some claiming their balances turned to zero.
“Have been trying to log in to an account that says update now bug fix but it just freezes after I click update. Wondering what happened to my account shows $0.00.”
David Salinas
Tagged As Untrack Listing on CoinMarketCap
In September 2023, the exchange had a daily crypto trading volume of about $2.6 billion, making it one of the leading global crypto exchanges in terms of capitalization on Coinmarketcap.
However, the World’s largest crypto-tracking site has changed the status of the exchange to “data is untrack listing” while it also reported that it is unable to track data from the exchange. Of course, when this happens, it raises red flags and could ignite users’ anxiety.
Impact on OMI Token
Similar to how the collapse of FTX affected the value of APTOS (APT), Wrapped Bitcoin and some of the company’s holdings, the recent incident has impacted the price of OMI token (issued by ECOMI), due to BitForex holding a large portion of it. OMI Token’s price has plummeted by over 80% as per our check.
App is no longer responsive
Apart from users’ inability to access the website, many users have also complained that they are unable to login through the app. Why does the app not load again?
A user who may have possibly lost his funds wrote:
“I am having the same issue. App is frozen. I sent an email to customer service on Friday 23-02-24, but haven’t heard anything about it yet. If someone else could help. Please. Update: I’ve been reaching online and it is not looking good. Looks like this exchange is under.”
Wilson Fernando
The install link of the exchange was still active at the time of publication, but it is no longer safe for download or use. Well, what’s even the benefit of downloading an app that doesn’t no longer work?
Any Hope of Recovery for Users?
Absolutely, yes, but at a cost.
While crypto transactions are known to be anonymous, a more advanced technology can be used to recover lost crypto assets, especially when the recipient wallets are known.
As for BitForex, there are reports that nearly $57 million in crypto assets were sent to the following wallet addresses:
- 0xdcacd7eb6692b816b6957f8898c1c4b63d1fc01f
- 3DbbF7yxCR7ni94ANrRkfV12rJoxrmo1o2
- TQcnqaU4NDTR86eA4FZneeKfJMiQi7i76o
As such, the first step of recovery is to know where crypto funds were sent to and then reach out to professional cryptocurrency recovery companies such as the UK-based Blockchain investigation agency, CipherBlade, and Coinfirm by Lukka.
Most times, crypto recovery comes at a cost, they often get a percentage of the recovered funds.
I have also seen that victims of Bitforex exchange have formed and created a dedicated Telegram group named, “scammedbyBitForex” where users share their experiences and explore potential avenues for recovery. The group has garnered over 700 members at this time.
If crypto is regulated in your country, it is also a good idea to file complaints with regulatory bodies.
History of controversy
In April 2023, Japan’s Financial Services Agency (FSA) warned its citizens, after accusing BitForex of violating the country’s fund settlement laws and of operating without proper registration.
The exchange had also been accused in the past of manipulating trading volume as a ploy to get more people aboard.
Conclusion
Before this time BitForex used to be a leading cryptocurrency exchange in the world, which provided a wide range of trading products, including spot trading, margin trading, and derivatives.
Headquartered in Hong Kong, and registered in the Republic of Seychelles, the exchange has over 3.5 million users from more than 200 countries around the world.
At this time, exercise caution on who you share your wallet address with even as you try to recover your lost funds.