HitBTC insolvency brought into question as new research points to red flags

The cryptocurrency market has had its fair share of controversies, with the latest report from Cointelligence speculating that HitBTC, a popular cryptocurrency exchange, might be insolvent. Cointelligence has claimed that HitBTC has only $3 million in Bitcoin [BTC] and Ethereum [ETH] across its wallets. This information was provided by a cryptocurrency organization called Coinfirm.

The report has covered four different areas where HitBTC’s data did not match up to what was expected: proof of reserves, withdrawal issues following its new KYC/AML policy, increased withdrawal fees as well as the company’s team.

In its report, Cointelligence stated,

“The first list of proof of reserves provided by Coinfirm and the AMLT Token Network on the 8th of April showed that HitBTC is holding 245.20 BTC in their hot and cold wallets, clusters at block height 570159 clustered at block height 568918.”

Three snapshots were conducted to calculate the total trading volume on HitBTC. They revealed that Bitcoin pairs amounted to $537 million and Ethereum trading pairs amounted to $155.79 million. When compared to other exchanges like Kraken, Bittrex, and Poloniex, the disparity between the proof of reserves and BTC trading pair volumes in HitBTC were significant.

Another major issue addressed by Cointelligence was the withdrawal fee hike that coincided with the new KYC implementation on the platform. The report said,

“Ironically, they use the pretense of a best practice known as Know Your Customer (KYC) as a masquerade to seemingly swindle funds on an indefinite basis, refusing requests for a refund. Name, address, citizenship and photo ID are all ways in which KYC can be implemented – it seems that HitBTC’s no ID policy was designed to get customers on board before the u-turn gave them a convenient excuse to freeze accounts.”

The cryptocurrency research website further added that they had contacted a user who complained about HitBTC and its reluctance to release funds from its roster after the new KYC/AML update. This issue was raised earlier by another user too, stating that a lot of users were facing trouble while withdrawing their virtual currencies for a couple of weeks.

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