Questions Linger From A Crypto Exchange’s Rare Bull Market Meltdown

The exchange, whose founder and CEO resigned three weeks ago, has gone dark just as bitcoin climbs toward its November 2021 all-time high of $69,000.

Offshore crypto exchange BitForex went offline over the weekend, leaving its self-reported six million users in the dark after a promised change in leadership failed to materialize. BitForex stopped updating prices on Friday, and its website went dark over the weekend. Its X and Telegram channels have not been updated since February 20.

Additionally, a shared crypto wallet linked to Bitforex.com saw the exit of $56.5 million on February 23, according to a prominent crypto sleuth going by the name of ZachXBT on Twitter and Telegram.

The exchange did not respond to email requests for information about its status. According to Pitchbook, Byte Capital and Consensus Lab were the only sources of venture capital for Bitforex back in 2018; they also did not respond to requests for comment.

Founded in Hong Kong six years ago and operating as an offshore unregulated entity, BitForex claims to have served more than six million customers and, up until last week routinely generated as much as $2.5 billion of crypto trading volume daily, according to self-disclosed exchange data published by CoinMarketCap.com last week. Other estimates of BitForex.com trading volume placed it over $2 billion daily across 387 cryptocurrency trading pairs, while some like that of CryptoRank, were much lower.

BitForex Trading Volume Estimates In $ millions daily, week of Feb 19, 2024

On January 31, Xinyao (Jason) Luo, the exchange’s founder and CEO announced his departure and said a new leadership team was “poised to take reins” and would “guide BitForex towards even greater horizons.”

This cryptic message is not the only mystery about the firm.

A major question to be answered is why the exchange stopped operating at a time when the crypto market is on the upswing. Bitcoin
BTC
just passed $57,000 for the first time since 2021 and could be preparing to set an all-time high later in the year as inflows into new exchange-traded funds based on the token’s spot price continue to climb. The high-profile exchange collapses in 2022 of firms like FTX, Celsius, BlockFi, Genesis, came during a bear market that was set off by irresponsible lending and other improprieties that seem to have dissipated.

A clue to BitForex’s situation could lie in its Japanese operations. Data from SimilarWeb, a web traffic analytics company, shows that 74% of BitForex.com’s visitors during November 2023 came from Japan, where the company was never authorized to offer its services. The next-largest jurisdictions were India (7%) and Turkey (3%).

BitForex.com Geographic Traffic Origin Jan 2021 to Jan 2024

The exchange experienced an 85% decline in traffic to just 176,000 web visits in January from 392,ooo in December and 12.5 million in November. One possible explanation for the decline could be a crackdown by Japanese authorities. Forbes contacted the Japanese Financial Services Authority, the country’s main crypto regulator, but has not received a response.

The apparent collapse of BitForex highlights the challenges faced by crypto investors seeking safe, reliable and regulated exchanges. Forbes published a ranking of the top 60 exchanges in March 2022, and BitForex did not make the list. However, CoinPaprika and CryptoRank had it rated as the third- and 27th- best exchanges globally as of 2024. Accounting for this exchange’s less reliability, others had it rated outside of the top 100 entirely.