With its headquarters located in Hong Kong, crypto exchange BitForex has abruptly shut down its operations, which has left customers confused.
Most importantly, they are unable to access their funds, which has left many wondering if there has been an exit scam.
The events
Before Bitforex ceased its operations, its hot wallets saw major digital currency outflows on February 23rd that reached almost $56.5 million.
ZachXBT, the on-chain investigator, had detected this movement. Data from CoinGecko and CoinMarketCap shows that there is zero trading volume on the crypto exchange.
There has been a flurry of user complaints made on the official Telegram channel of the BitForex exchange after the sudden suspension of withdrawals.
Many people reported being unable to access their accounts or seeing their balances zeroed out on the dashboard.
The matters were complicated further when the exchange allegedly started deleting selective messages that addressed the concerns of the users since the halt.
Most importantly, its Community Manager changed her profile picture not long after the suspension and went completely silent.
The unrest was not quelled by the statement issued by BitForex about the ‘unscheduled maintenance’ of the exchange.
The statement
This had been communicated by the exchange to the official account of the OMI ecosystem, which shared it on X.
The exchange stated that it was undergoing unscheduled maintenance and the OMI ecosystem said that they had contacted the exchange and would share updates when further information is made available.
Almost 7% of the OMI supply is held on the BitForex exchange. OMI is the utility token of the Veve ecosystem, which is a well-known marketplace for NFT trading.
Before the incident, the OMI token was trading at $0.0069, but it suffered a crash of 88%, which saw it reach $0.00078.
Currently, the crypto exchange remains inaccessible, with only a few support pages available. This includes the departure announcement of CEO Jason Luo on January 31st.
Anything other than that cannot be accessed by visitors, or users for that matter.
The history
It is not the first time that the crypto exchange has been embroiled in controversy. The Financial Services Agency (FSA) in Japan had flagged BitForex last year for operating without proper registration.
In addition, the exchange has also been accused of faking its trading volume in the past. While the original BitForex group remains silent, a new one called ‘Scammed by BitForex’ has gained traction.
It has garnered about 150 users who have shared their grievances with the crypto exchange and are demanding collective action.
Some users have also reached out to the Securities and Futures Commission (SFC) in Hong Kong and have encouraged other victims to follow suit and spread awareness.
If this is an exit scam, then it would not be the first time for a crypto exchange to shut down mysteriously, leaving customer funds hanging in the balance.
QuadrigaCX, an exchange based in Canada, also saw its downfall happen in 2019 after its founder Gerald Cotton died in 2018.