Bittrex Suspends Thousands of User Accounts

Coin Telegraph reports that Bittrex has been mysteriously suspending thousand of investor accounts without forewarning, and without offering users an explanation.

The company didn’t respond to questions on its Slack channel, and users report that their attempts to enquire on the channel resulted in being banned from the company’s Slack. There was no official statement on the exchange’s Twitter channel, either, save for a comment on tweet directing users to the company’s support page. A statement was only released days later.

https://twitter.com/BittrexExchange/status/917823011683680258?ref_src=twsrc%5Etfw” target=”_blank” rel=”noopener
 

SEC / OFAC involvement

Some users speculate that the closures come as a result of SEC involvement, necessitating the exchange to double-back on its personal identification measures.

Although it would appear that most of the affected accounts are those of foreign nationals (most notably Indian, Iranian, Pakistani, Russian, Syrian, and Turkish), some American citizens also had their accounts closed. In addition, some French and German accounts were affected as well.

Bittrex responds

By late yesterday, Bittrex released a formal statement:

“We occasionally conduct compliance reviews and are working vigilantly to protect our service and our users from harm. As part of a compliance review, we have temporarily suspended certain accounts pending the completion of the review.”

In response to other reports of slack bannings and miscalculated fees, Bittrex answered:

“Any reports that Bittrex miscalculated or misapplied its exchange fees, that there is a security problem with the exchange, that Bittrex lost any coins stored on users’ behalf, or that Bittrex is banning people trying to access Slack to discuss the status of their accounts are incorrect.”

Decentralized exchanges

The experience left a bad taste with some users, and renewed a call for the establishment of robust reliable decentralized exchanges that would not involve a centralized authority storing private encryption keys. The risk run by using an exchange such as Bittrex is that private keys could be compromised, or that account access could be cut.

Some affected users have pointed out that this exemplifies why decentralized blockchain technology may the way of the future. However, with the speed of transaction processing capabilities still being a hindrance, a truly efficient decentralized exchange is at this stage a work in progress.

Also read: Investing in Cryptocurrency – A Beginner’s Guide