ZachXBT Highlights Suspicious Activity on BitForex Crypto Exchange

In an X post on Feb. 26, on-chain detective ZachXBT alarmed the crypto community about suspicious activity with the Hong Kong-based crypto exchange BitForex. According to the investigator, three BitForex hot wallets saw outflows of around $56.5 million on Feb. 23. Following that anomalous withdrawal, the company suspended withdrawals without giving a reason, ZachXBT added.

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

The BitForex’s X account hasn’t been updated since May last year. On its official Telegram channel, users are reporting problems with their accounts, such as being unable to access them or encountering empty dashboards. Many users also posted a screenshot of a pop-up indicating they are blocked from accessing the company’s website. The team has not replied to any of the questions yet. CoinCult attempted to open the BitForex website but encountered the same issue.

A user who contacted ZachXBT mentioned that admins in the BitForex Telegram initially claimed the issue was because of ongoing maintenance. However, he said the admin changed her username and stopped responding.

Meanwhile, ZachXBT highlighted that the BitForex CEO had stepped down one month ago. It also mentioned that the crypto exchange held 7% of the OMI total supply and 18% of the TRB coin supply. TRB’s price hasn’t been affected by the BitForex changes. TradingView data shows the crypto coin’s low volume has remained consistent since a significant drop at the beginning of the year. TRB is trading at $115.39, and the price has not changed significantly over the past three days.

Contrary to TRB’s behavior, OMI’s price sharply dropped from $0.00118 on Feb. 21, losing over 35% of its value. According to TradingView, OMI was trading at $0.00076 at the time of writing.

Concerns and Regulatory History

In September 2023, BitForex was among the top global crypto exchanges in terms of market capitalization. Its daily trading volume stood at approximately $2.5 billion in crypto. CoinMarketCap doesn’t offer live data for BitForex.

In April 2023, Japan’s Financial Services Agency (FSA) accused BitForex of breaking the country’s fund settlement laws, stating the exchange operated without proper registration in the country. However, recent events like sudden withdrawal halts and substantial fund outflows have again put the exchange in the spotlight, prompting renewed scrutiny from regulatory bodies and industry observers. A comparison to cases like the shutdown of Hong Kong’s Atomic Asset Exchange (AAX) highlights the seriousness of BitForex’s situation.

Last week, AAX transferred approximately $55.6 million worth of Ether from its wallets. AAX ceased operations on November 13, 2022, just two days after FTX filed for bankruptcy. After the shutdown, Hong Kong police arrested AAX’s former CEO Thor Chan and board member Haoming Liang in 2022. However, the AAX founder, whose identity is unknown, allegedly fled with $29.41 million of users’ money and private keys for exchange wallets.