Blockchain investigation firm: HitBTC is a "wolf in sheep's clothing"

The Chief Investigator of CipherBlade, Richard Sanders, who is dubbed the "Blockchain Investigation Bureau," claims that the cryptocurrency exchange HitBTC is the industry's "largest criminal fraud entity."

According to Sanders' report on his Blog, HitBTC has gone bankrupt. Despite the company claiming to be a top exchange with high security and liquidity in the market, Sanders believes that the exchange is unable to repay its debts, and its design allows them to selectively deceive users.

Falsifying Trading Volume

HitBTC has often been accused of falsifying its trading volume. This year, Bitwise's exchange trading volume report specifically pointed this out, stating:

It's easy to prove that HitBTC's trading volume is almost entirely fake, using order book and trading volume data similar to other exchanges.

Furthermore, HitBTC has the lowest website traffic among all peers, with 1.27 million visits and a trading volume of $550 million. In contrast, Bittrex has a trading volume of only $15 million but double the website visits compared to HitBTC.

A report suggests that users have no reason to flock to HitBTC, especially when there are accusations of their API program stealing funds.

Suspected Trading with User Funds

After Bitwise released a report on wash trading, most exchanges underwent third-party audits to regain user trust. Exchanges like Kraken and Bitbuy have conducted reserve proofs and security audits. However, HitBTC has yet to undergo any form of audit, and its team remains anonymous.

Sanders believes that without actual audits, analysis can be done by comparing wallet balances with cold and hot wallets. He stated:

A quick look at their Ethereum wallets reveals transaction volumes disproportionate to the WETH smart contract. Based on my extensive experience with such cases, this is likely HitBTC staff holding and trading user funds.

Freezing User Assets

During the annual Proof of Keys event (where investors withdraw their crypto assets from exchanges to pressure test their deposits), HitBTC struggled in the test and preemptively froze user assets. HitBTC responded:

These are individual cases arising from compliance with anti-money laundering regulations.

Sanders also noted that HitBTC's official Reddit community is filled with complaints of fraud and frozen assets. Considering these factors, Sanders urges all users to withdraw funds from the exchange before it's too late.

While there is no absolute evidence to completely refute HitBTC's counterarguments, a large number of reports and evidence still indicate suspicious business practices and clear signs of bankruptcy at HitBTC.

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