Bitcoin Exchange HitBTC Freezes Customers’ Accounts Before Proof-of-Keys Event

Cryptocurrency exchange HitBTC has frozen its customers’ accounts ahead of an annual Proof-of-Keys event, according to multiple sources.

It started on New Year’s Eve, 31st December 2018, when a Redditor who went by the username “PEDXS” made a complaint on the social media website where he accused HitBTC of suspending his withdrawal rights, even after he had dutifully completed his KYC test. The user said that they had to wait for six months before the KYC to make withdrawals and soon after the test, they had withdrawn most of their money from their wallet, leaving a small portion in their account for day trading.

A portion of the post reads,

“After months of sending 40 plus emails, HitBTC finally unfroze my account… I immediately withdrew most of my funds but left a small amount to day trade. I did that because HITBTC promised that “No further automated restrictions will be applied.”

Another Redditor, who went by the alias “LOOKATMYIQ” made a similar complaint against the company. Their post says,

“Submitted all my documents/evidence for KYC days ago and now support [is] going cold on me. Have I been scammed? I have been trading crypto for years on all kind of exchanges and never had my funds locked without warning like this. Support [was] fast to respond when asking for additional (over the top) information but since I have given them everything they have asked for they’ve just disappeared on me.”

A Redditor who seemingly posed as a representative of HitBTC collected all the complaints and promised to follow up on all of them.

PEDXS doubted that HitBTC is intentionally locking users’ accounts fearing massive coin withdrawals on the annual Proof-of-Keys event.

Proof-of-Keys is an annual event, started by renowned Bitcoin Investor Trace Mayer, which encourages every cryptocurrency user trading their digital assets using third-party platforms to withdraw all their assets from their accounts on 3rd January on every year. The aim here is to test the platform’s solvency. This is also a way to detect that whether or not crypto exchanges hold the funds that have been deposited into their private wallets in the past.

PEDXS added in their complaint that,

“Over the months, from day trading I have built back my balance up to a couple BTC…With the proof of key date approaching, I felt that HITBTC is the prime suspect for being insolvent, so I tried withdrawing my BTC. Guess what, they blocked the withdrawal and froze my account again.”

It seems that this is a shady tactic that HitBTC is using to protect itself from the massive Bitcoin withdrawal that is quite possibly happening tomorrow.

John McAfee, the founder of McAfee Associates had also requested people to boycott he trading platform earlier in 2018.