Five months ago, the cryptocurrency exchange BitForex suddenly vanished, leaving its users in a state of confusion and worry. The company went silent on social media, and a staggering $57 million in user funds were transferred to a new wallet without any explanation.
Just last Friday, BitForex finally broke its silence. The company revealed that its absence was due to a police investigation in China’s Jiangsu province, during which some of its staff members were detained. BitForex promised that users would "soon" be able to withdraw their assets, but added that the platform will not resume trading or accept new user registrations and deposits.
"We understand that this incident has caused significant inconvenience and distress to our users, and we sincerely apologize for this," the company stated. "We are making every effort to ensure the safety of user assets."
This sudden reappearance has brought a mix of relief and more questions. Back in February, BitForex had initially blamed its downtime on "unscheduled maintenance." This explanation didn't seem to fit with the later news of police detentions, fueling rumors that Chinese authorities had detained someone linked to the exchange.
According to sources, Chinese authorities suspected BitForex was operating a cryptocurrency exchange within China, which led to the detentions. Jason Luo, BitForex’s former CEO, denied these allegations. He explained that employees were working from Singapore and had only returned to China for the New Year holidays when they were detained. Luo also mentioned he was working to resolve the situation and had hired lawyers to help.
Luo’s role in the company is now unclear. He stepped down as CEO just weeks before BitForex went offline, adding to the uncertainty. The exchange has not confirmed if he was among those detained. The investigation in Jiangsu raises several questions, as BitForex had never disclosed any ties to this coastal province north of Shanghai.
BitForex’s LinkedIn profile suggests it employs between 51 and 200 people, but the company hasn't specified who was detained, their roles, or the number of staff involved. The company claims to be headquartered in Hong Kong, but it doesn’t seem to have a physical office there. Addresses listed on business documents and press releases lead to virtual address services.
In March, the Hong Kong Securities and Futures Commission labeled BitForex as a suspicious platform, suspecting it of fraudulent activities. As of May 9, Hong Kong police were still investigating BitForex’s activities. Despite numerous attempts to get updates, the police have not provided any further information.
Messages sent to BitForex’s email and Telegram accounts, as well as to Jason Luo, have gone unanswered. This situation highlights the risks of running and working for cryptocurrency projects in China, where it's common for staff to be based in China for cost reasons, even if the company is registered abroad.
This incident is reminiscent of the arrest of Multichain founder and CEO, Zhaojun He, in Kunming, southern China, in May 2023. His whereabouts remained unknown for months, and Multichain was later hacked on July 7 for $125 million. His sister’s attempt to transfer the remaining money into her own wallets led to her arrest on July 13.
The BitForex disappearance and subsequent revelations emphasize the volatility and uncertainty in the cryptocurrency industry. As the investigation continues, users and stakeholders eagerly await further updates on the fate of BitForex and their assets.
Tags:
Global News