- Cybersecurity expert ZachXBT has raised the alarm over the crypto exchange BitForex.
- The exchange recorded significant outflows in the past week.
- BitForex’s CEO, Jason Luo, exited the exchange earlier this year.
The pseudonymous nature of the cryptocurrency industry has often made it susceptible to threats, leveraged by malicious actors to exploit unsuspecting investors via various hacks and scams.
However, beyond the external threats, the industry is also plagued by illicit internal acts like exit scams, where projects or firms deceive investors into building trust before abruptly disappearing, leaving them to grapple with significant losses.
Now thrust under the spotlight is crypto exchange BitForex, which is suspected to have gone AWOL on its users.
BitForex Scam Concerns
On Monday, February 26, blockchain cybersecurity ZachXBT alerted the crypto industry of suspicious activity on BitForex, hinting at the possibility of a rugpull scam.
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The unusual activity allegedly commenced on February 23, when the exchange halted asset withdrawals on its platforms following a staggering $56.5 million withdrawal from its hot wallets.
Heightening user apprehensions, Bitforex’s official website became unresponsive, blocking user access. Additionally, several of the exchange’s official communication channels, such as Telegram and X, have fallen silent, with numerous user complaints unanswered.
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The developments follow the exodus of BitForex’s former CEO, Jason Lou, who bid farewell to the exchange in January with no specified reasons. The timing of both events and the lack of transparency from the exchange has fueled speculation of a meticulously calculated scam among users, who have since taken to social media platform X to voice their grievances.
BitForex Scam: Users Demand Answers
Since February 24, nearly 170 users have flooded the exchange with questions about its whereabouts, demanding access to their wallets and assets.
X user Alxchivas emphasized that several top tokens dipped nearly 60%-80% in price before the exchange’s shutdown. Alxchivas asserted that this was likely done to “attract more money,” luring investors to buy cheaper before going dark.
Users have recommended turning to regulatory authorities to log a legal loss if the exchange does not resurface. There has been no official statement from BitForex or its executives at press time.
On the Flipside
- Despite the BitForex scam allegations, some users have raised the possibility of the exchange falling victim to a cyberattack.
- BitForex was among the four exchanges flagged by the Japanese regulatory authority in April 2023.
- BitForex has a significant 18% of Tellor ($TRB) supply valued at approximately $54 million and approximately 7% of the $OMI supply.
Why This Matters
The crypto industry is heavily reliant on transparency and trust, and events like this can significantly undermine investor confidence in crypto exchanges, potentially shaping the trajectory of the broader ecosystem.
Read here to discover how to stay safe from rug pulls:
How Auditors Detect a DeFi Rug Pull Scam: Can You Do It Yourself?
Find out more about FTX’s move to dump its shares in AI startup Anthropic:
FTX Receives Court Approval to Sell $1.4B Anthropic Stake
