The Hong Kong-based cryptocurrency platform BitForex has unexpectedly shut down, leaving its user base in a state of confusion and without access to their assets. There are growing concerns that the company may have orchestrated an exit scam.

Large withdrawals were noted from BitForex’s hot wallets, with an estimated $56.5 million in digital assets moved on February 23, this activity was reported by an anonymous on-chain analyst, ZachXBT. The platform is now reportedly showing no trading activity, this information corroborated by statistics from CoinMarketCap and CoinGecko.

Ever since halting withdrawals, BitForex’s official Telegram channel has been bombarded with user complaints about inaccessible accounts and dashboards displaying zero balances. Adding to the severity, the exchange has been purportedly censoring posts addressing these issues and the Community Manager became unresponsive, even altering her profile image following the events.

Decrypt made attempts to contact BitForex to request their commentary but the publication did not receive any immediate feedback from the exchange or its community manager.

The statement from BitForex attributing the interruption to “unscheduled maintenance” has failed to alleviate customer concerns.

On Twitter, the exchange informed the OMI ecosystem’s official account with a message saying, “The exchange cites ongoing unscheduled maintenance. Direct communication has been initiated with the exchange and updates will be relayed to our community as we gather more information.”

Sample messages from BitForex’s official Telegram channel. Credit: Decrypt

Nearly 7% of the OMI supply is locked within BitForex. The token, OMI, is integral to the Veve ecosystem, a distinguished NFT marketplace backed by significant brands like Marvel and Disney. Following the incident, OMI’s price plummeted from $0.0069 to $0.00078, marking an 88% decline.

Presently, the platform is largely inaccessible to users, with the exception of a few support articles. This includes an announcement about the departure of CEO Jason Luo on January 31.

In the past, BitForex has faced scrutiny. Japan’s Financial Services Agency (FSA) issued a warning against the exchange for operating without official authorization, and it has been called out for fabricating trade volumes.

Communication from the official BitForex Telegram group has ceased, while a new Telegram group titled “Scammed by BitForex” is gaining traction with over 150 members sharing their experiences and coordinating efforts for recourse. They are advocating for a collective action approach, including lodging complaints to the SFC in Hong Kong and garnering attention from influential figures in the crypto community.

Should BitForex indeed be implicated in an exit scam, it would join a list of prior incidents where crypto platforms have abruptly closed, jeopardizing client assets. A notable case occurred with the Canadian platform QuadrigaCX, which shut down in 2019, after the demise of its founder Gerald Cotton in 2018, leading to suspicions of a Ponzi scheme and uninvested customer assets.

Edited by Andrew Hayward