[2019-01-02] HitBTC freezes customer funds before proof of keys event

[bbc.reporter]

Proof of keys is a movement from within the bitcoin community to withdraw all their bitcoins from the exchanges to celebrate the birth of the bitcoin genesis block on January 3.

In any case, what this might also cause is that it might expose some exchanges to be running a fractional reserve. Signifying, that they might not have the bitcoins to accomodate all withdrawals hehehe.



HitBTC, a popular cryptocurrency exchange, has been accused of freezing withdrawals for many of its customer’s accounts. The withdrawals reportedly took place just days before the much-anticipated Proof of Keys event, where cryptocurrency investors are prompted to remove all of their assets from third-party platforms to take control of their private keys.

According to multiple sources on Reddit, HitBTC’s account suspensions began on December 31, 2018, when a user by the name of PEDXS had his account frozen. The user claimed HitBTC repeatedly denied his request to withdraw his altcoin holdings despite completing all of the required KYC tests. And while he eventually regained control of his account, the exchange failed to provide an explanation.

Another user took to Reddit to complain about the “withdrawal rejections” he faced on the exchange, saying that he never had his funds locked without warning before. The user explained that customer support was initially fast to respond but quickly disappeared once they were faced with tough questions about the withdrawals.

Since then, numerous testimonies have popped up on social media where users voiced their concerns about the exchange’s practice of freezing withdrawals. Users have also become suspicious about the timing of the event, saying that these “roadblocks” could be a part of HitBTC’s plan to prevent withdrawals during the Proof of Keys event.

However, some experts have argued that HitBTC hs been behind on withdrawals and indiscriminately freezing accounts for months and that the fact it happened just before the Proof of Keys event was nothing more than a coincidence.

Read in full https://btcmanager.com/hitbtc-freezes-customer-accounts-proof-keys-event/

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[bL4nkcode]

HitBTC, a popular cryptocurrency exchange,

No they're not.

HitBTC’s account suspensions began on December 31, 2018,

As far as I remember, it happens months ago even not just in december. I saw many threads in this forum, twitter, and reddits about this type if scheme of hitbtc.

But seriously, this is not new to that exchange, there are lots of reports related to this, even lost funds without any notification and a breached 2fa of some accounts there.
People should stop using this exchange if they care for their money.

[Kakmakr]

If this event is effective in exposing only ONE of these exchanges that are doing this, then it reached it's goal. People should be aware of the "bad" services out there and the ones that operate legitimately. The event also highlights the important fact that services like this are the custodial of your private keys and that it is not your coins, if you are not the sole owner of those private keys.

Fractional reserve actions in the Banking industry nearly destroyed the global economy and we do not want to repeat those mistakes in Bitcoin. 

[buwaytress]

Yeah, this was pure coincidence. Even I have to say I honestly never heard of this event until last month when it was in the media, and I've already been through 2 3/Jans before this. HitBTC has been doing this for a while, and they're not the only guilty party. Exchanges probably are the biggest culprits, but really, any website that gives you a "wallet" without your own private keys keeps your coins for you. As soon as you use one of those services, you've given up control over your coins and placed your trust in a service.

I do it all the time, necessarily. But as soon as I'm done using the service, I take back all my coins.

If the event helps people understand Bitcoin better, good. I suspect they won't though.

[cybersofts]

Well, I was all a victim to this new HitBTC's action.
My account was frozen January 1st, 2019 for an unnecessary reason.
Thank god my mourning period is going to be over today.
I feel really sad for HitBTC suspending my account though.

[1Referee]

If the event helps people understand Bitcoin better, good. I suspect they won't though.

I doubt it, because even if they do withdraw their funds, they send it right back whenever the 'hype' around this event is over, the next day.

I'm more worried about the noobs following the herd just to be cool, because they have no clue about the importance of using trusted clients, signing keys before installing anything, securely generating key pairs, etc. If they withdraw their funds to an address generated by whatever malicious client, it's over.

Looking at the on-chain transaction volume today, there isn't much going on that would indicate any sort of success of this event.

[gentlemand]

Going on chain activity it seems this event was ignored by users. There were no spikes anywhere. It does have more visibility than in previous years so I hope it grows as an idea.

As for HitBTC, their rep is toxic enough for this not to make it any worse than it already is. How somewhere like that still has any relevance is beyond me.

[bbc.reporter]

Well, I was all a victim to this new HitBTC's action.
My account was frozen January 1st, 2019 for an unnecessary reason.
Thank god my mourning period is going to be over today.
I feel really sad for HitBTC suspending my account though.

It said that your account will be frozen until January 3. It must be the proof of keys movement they are attempting to stop. I reckon HitBTC has the right to, however it also communicates the message the the proof of keys movement was trying to make. Not your keys, not your coins.

[BitHodler]

I'm actually glad that people didn't respond to this, because that would be an absolute nightmare. If one person could get people to do this, it would show how much more stupid the majority is.

I would be shocked to find out that exchanges don't gamble with people's funds on the market. It's easy to access, and they have enough in their reserve to have the small minority that does cash out still cash out.

Banks haven't been doing anything else throughout their existence with people's funds, so why should crypto exchanges be different? Most of them are even more shady....

[Slow death]

I do not know anything about proof of keys event, but it is the right of every person to do what he wants with his bitcoins, Hitbtc does not have the right to freeze accounts of people because he wants to determine what people should or should not do with their own coins. I do not understand why the hell people keep using hitbtc. I believe that with this episode will not serve as a lesson for people, people will continue to use hitbtc and will come here in the forum complain about hitbtc

[rodskee]

Awts  bads news for the users of HITBTC exchange freezes their withdraw is unlawful
I am not HITBTC user but if this news is not good fro the exchange reputation
If they have an kyc requiremment they notice early for the user to avoid any speculation

[bbc.reporter]

I'm actually glad that people didn't respond to this, because that would be an absolute nightmare. If one person could get people to do this, it would show how much more stupid the majority is.

I would be shocked to find out that exchanges don't gamble with people's funds on the market. It's easy to access, and they have enough in their reserve to have the small minority that does cash out still cash out.

Banks haven't been doing anything else throughout their existence with people's funds, so why should crypto exchanges be different? Most of them are even more shady....

I reckon that would be a reason more to respond to it and withdraw their coins. Yes, we know that exchanges gamble with the people's funds. However there should be transparency.

In any case, exchanges should offer interest bearing accounts that are opt in to give the people the choice if they want their funds to be gambled or not.

[gentlemand]

Banks haven't been doing anything else throughout their existence with people's funds, so why should crypto exchanges be different? Most of them are even more shady....

It is an interesting area as I presume there are no legal grounds to demand full backing, it's just assumed by users. That being the case I fully support anything that rams home how precarious certain exchanges are and proof of keys is the way to do it.

It looks like no one gave a shit. They're going to continue needing raping before they do take it seriously, though it should be clear enough by now.

[milewilda]

I'm actually glad that people didn't respond to this, because that would be an absolute nightmare. If one person could get people to do this, it would show how much more stupid the majority is.

I would be shocked to find out that exchanges don't gamble with people's funds on the market. It's easy to access, and they have enough in their reserve to have the small minority that does cash out still cash out.

Banks haven't been doing anything else throughout their existence with people's funds, so why should crypto exchanges be different? Most of them are even more shady....

I reckon that would be a reason more to respond to it and withdraw their coins. Yes, we know that exchanges gamble with the people's funds. However there should be transparency.

In any case, exchanges should offer interest bearing accounts that are opt in to give the people the choice if they want their funds to be gambled or not.

They wont give that option to the people since they can able to do such thing without any permission or users awareness into their funds if its being gambled or not. Once you have deposited
or stored up funds on their platform then its just like they do tie up your neck since those funds can be anytime to be hold-up as of their liking.These step done by HitBTC is indeed shady and its not
a coincidence because if we do base up on last month of last year they do already foreseen the upcoming event.

[stompix]

Yeah, this was pure coincidence. Even I have to say I honestly never heard of this event until last month when it was in the media, and I've already been through 2 3/Jans before this.

This is the first time I hear about it, but I'm participating for years in it 
Since I've quit a long time ago any trading or attempts at trading I've been storing all the coins in my wallet, I think I have less than 0.050 in my localbitcoins account, those are the only bits I still have in an online wallet.

HitBTC, a popular cryptocurrency exchange,

No they're not.

Unfortunately right now popularity is based on how much you can inflate your numbers to gain ranks on coinmarketcap.
And hitbtc is doing a pretty damn good job at it.

If this event is effective in exposing only ONE of these exchanges that are doing this, then it reached it's goal.

People don't learn.
If everybody in this world would send their coins to an address, all the mined coins will be in one place and OKEx will still show billions in daily trade they will believe it.

How many times have exchanges been "exposed" for their shady practices? I've lost count of it.

[BitHodler]

In any case, exchanges should offer interest bearing accounts that are opt in to give the people the choice if they want their funds to be gambled or not.

That would at least offer a bit more transparency, but I'm sure they aren't interested in that with their current core business being more than profitable already. Waking up sleeping dogs mostly doesn't end well....

That being the case I fully support anything that rams home how precarious certain exchanges are and proof of keys is the way to do it.

It looks like no one gave a shit. They're going to continue needing raping before they do take it seriously, though it should be clear enough by now.

Most people enter crypto through Coinbase and leave their funds there, or send it straight to Binance or other exchanges. They probably don't even know what private keys are, so it was an experiment doomed to fail.

Those who do know the importance of it probably don't care since they are more worried about missing out on trading opportunities. I'm afraid that people will keep cutting themselves open with how careless and ignorant they are.

[bbc.reporter]

@BitHolder. I reckon interest bearing accounts are the next step in development among exchanges. It would also be good used as a marketing and promotional tool to attract users.

I predict that Coinbase will be one of the first exchanges to have it.

[1Referee]

I reckon interest bearing accounts are the next step in development among exchanges. It would also be good used as a marketing and promotional tool to attract users.

I predict that Coinbase will be one of the first exchanges to have it.

That will suck hard. For a tiny bit of interest you will agree to have the exchange shit on you, and whenever you want to withdraw, you have to kindly ask for permission to withdraw whatever your daily withdrawal limit allows you to withdraw. Another thing is that the terms will obviously favor the house; the exchange gets the profits and the losses are for you. This can only go wrong in the long term.

Coinbase seems to be going through a mid-life crisis so it wouldn't surprise me at all if they are the first regulated crypto entity to start doing it.

[bbc.reporter]

@1Referee. Agreed. However, exchanges already do have shit on us. They ask for our identities, control the amount we can withdraw and might also freeze our accounts if they found more shit they do not like.

Also if an exchange begun offering interest, would you trade in the one without or the one with? I reckon many people will go to the one with.

[1Referee]

Also if an exchange begun offering interest, would you trade in the one without or the one with? I reckon many people will go to the one with.

In my case it won't really matter since I always withdraw my funds after every trading session, but those who don't withdraw their funds will obviously have more incentive to use an exchange that rewards them for their 'trust'.

Now I think about it, there have been articles last year stating that Coinbase aims to apply for a banking license. I'm not sure how far Coinbase is on that front since they haven't been sharing anything with the outside world yet, but it could very well be that your thoughts about Coinbase possibly being the first in its kind to offer interest is less far fetched than I initially thought it was.

https://bitcoinist.com/coinbase-aims-obtain-banking-licenses/

[gentlemand]

@1Referee. Agreed. However, exchanges already do have shit on us. They ask for our identities, control the amount we can withdraw and might also freeze our accounts if they found more shit they do not like.

Also if an exchange begun offering interest, would you trade in the one without or the one with? I reckon many people will go to the one with.

The exchange is forced to do all of that as the price of keeping on the right side of the legislative types. They ain't doing it for fun. Presumably it adds tens of millions of dollars in annual extra costs to somewhere of Coinbases's size.

Someone somewhere is going to voice the idea of above board fractional reserve at some point. I'm extremely interested to see how it's taken. Though we like to think there'll be no shortage of outrage, most people will probably stampede towards it if there's the prospect of a piffling return in it for them.

It's odd how this has remained an unvoiced subject considering it happens everywhere else and I wonder how many crypto businesses have discussed this between themselves. The first place to do it may be shunned or everyone rushes to match them after watching for a while.