Popular Hong Kong-based crypto exchange, BitForex has stopped users from withdrawing their funds for three days now without stating a reason. The halting of withdrawal has generated numerous speculations relating to the future of the cryptocurrency exchange.
According to on-chain sleuth ZachXBT, a day before the suspension of withdrawal, about $56 million worth of cryptocurrencies were withdrawn from the exchange’s hot wallets. Users have complained that they can’t access their accounts. Also, some reported that their assets are no longer showing on the dashboard.
Some users revealed a notification on their screen indicating that they were blocked from accessing the website of BitForex. Presently, only a few portion of the exchange’s site is live. As of press time, a January 31 statement indicating that the CEO of the exchange, Jason Luo had parted ways with the company is still live on the website.
Amid the uncertainty, there are speculations that the BitForex team had scammed its users. Meanwhile, the exchange’s refusal to address the issue has fueled the rumors. Also, findings indicated that the exchange hasn’t updated its X (formerly Twitter) page since May 2023. Additionally, while users are lodging their complaints about the issue on the cryptocurrency exchange’s page, they are yet to receive any response from the team.
How BitForex Has Generated Unwanted Attention in the Past
Recall that in April 2023, the Japan Financial Services Agency (FSA) wrote a warning letter to foreign cryptocurrency exchanges operating in the country without due regulatory permits. These exchanges include BitForex, Bybit, MEXC Global, and Bitget. The FSA warned that operating in the country without due registration is a violation of its fund settlement laws.
Consequently, the FSA extended its warning to users using the aforementioned cryptocurrency exchanges. The regulator stated that using such unregulated platforms could expose users to some risks. Further, some of these risks as revealed by the FSA are fraud, market manipulation, and money laundering.
However, if speculations that the BitForex team had defrauded its users are true, regulators around the globe could intensify regulatory oversight in crypto markets within their jurisdictions. So far, Hong Kong has emerged as an investment hub for virtual assets businesses due to its relaxed approach to regulating the industry.
Lately, Hong Kong has introduced various measures and market-supporting initiatives to nurture the growth of its virtual assets market. Therefore, the approach has attracted top cryptocurrency establishments to venture into Hong Kong. On the flip side, the BitForex issue is likely to put regulators in the region on high alert. It could prompt them to instigate a clampdown on unregistered virtual assets service providers in Hong Kong.