The crypto exchange BitForex faced a major setback when it went offline following the withdrawal of $57 million from its hot wallets on February 23. Users attempting to access the platform were greeted with a message stating, “Sorry, you have been blocked.” This incident occurred amidst prior scrutiny as BitForex had been previously flagged by Japanese regulators in the past year for operating without a license.
Adding to its troubles, Hong Kong’s regulatory body for securities and futures markets issued a public warning about BitForex for suspected fraudulent activities, as announced on Monday.
Hong Kong’s Stance toward BitForex
Hong Kong has been adopting a more lenient stance towards crypto. Establishing itself as a global center for virtual assets while simultaneously trying to regulate an industry plagued by fraud.
Over the past year, the region has permitted crypto trading for ordinary investors and signaled its willingness to entertain applications for spot crypto exchange-traded funds (ETFs). However, there have also been law enforcement actions related to crypto openness, like the recent arrests for JPEX.
According to Hong Kong’s Securities and Futures Commission (SFC), “BitForex, purportedly headquartered in Hong Kong, has neither been licensed by the SFC nor applied to the SFC for a license to operate a VATP in Hong Kong.” Interestingly, BitForex holds a license to operate in Canada, raising questions about its activities in Hong Kong.
The SFC has taken proactive measures by requesting the Hong Kong Police Force to block access to relevant website links and social media pages associated with BitForex. As a result of BitForex’s website being shut down, victims have been unable to access their accounts and withdraw their funds held with the exchange.
Despite these developments, both crypto exchange and the Hong Kong police have remained tight-lipped, declining to comment on the situation. Hong Kong’s regulatory landscape for crypto is clouded by the lack of transparency.
What had happened previously?
When BitForex went offline on February 23, users experienced difficulties accessing the platform. Blockchain investigator ZachXBT noted that withdrawals had ceased processing and attempts to contact the BitForex team were unsuccessful. Visitors to the BitForex website were met with a message stating, “Sorry, you have been blocked.” It remained unclear whether the halt in withdrawals was due to a security breach or a voluntary action by the BitForex team.
BitForex holds a significant portion of Tellor (TRB) tokens, amounting to 18% of the total supply valued at $54 million, per reports. Raising concerns about the safety of users’ assets. In January, former CEO Jason Luo had announced his departure from the company after serving for six years.
The official BitForex account on social media platform X had not provided any updates since February 21, adding to the uncertainty surrounding the situation. Additionally, a 2019 report by Chainalysis had previously raised suspicions about BitForex’s trading volume, suggesting potential manipulation.
