Red Flags of a Trading Platform in Trouble - #CryptoTrading

Crypto trading red flags listed and explained, the poster child for troubled crypto exchange being 2017 Bittrex.
Red Flags     · [psa]

This is a PSA on how to tell your crypto exchange is in trouble.

The exchange used here as the poster child will be Bittrex, but I dare say some of the issues listed here might be very familiar to 2020 crypto traders as well.

Bittrex requires KYC/AML since 2019. Having been operational since 2014, it was a long journey to compliance though.

Withdrawal Limits, Changes in TOS

Bittrex started off by letting users trade crypto unverified back in the wild days of 2014.

The first limitation implemented was a withdrawal limit on non-KYC traders. When a non-KYC exchange actively tries to block money of their users to keep much of it in the exchange wallets, it’s always a sign of something going wrong.

It could be preparation for exit scam, it could be collecting money to pay off legal fees (not much difference there).

The best user policy to that date was to not depositing money above current verification level, which failed everyone in 2017. The allowed levels were set in USD, but the valuation of crypto shot up like crazy that year.

Locking up customer funds

As soon as Bittrex started playing with their account limitation settings, masses of people started turning to customer support - and never got any answer.

There were problems with money locked up, accounts disabled for no reason and of course the classic no response from customer service for months at a time.

Redditors reported many cases of what some call “the kyc scam”:

Prioritising Brand Damage Control

On Friday Dec 1 2017, Bittrex representative u/jyap reached out to the admins of the r/bittrex subreddit and demanded it to be closed down or set to private.

The r/bittrex admin u/keroncyst refused to hand over the subreddit.

Bittrex threatened to sue.

The subreddit was an unofficial one, set up by concerned Bittrex users who could not get hold of a customer support representative. And there were many…

Bittrex did not issue any comments on the situation, nobody addressed the issue. People who complied with KYC requests did not get any response from staff for months.

Traders were understandably fearing exit scam or bankruptcy – as always, when the platform doesn’t provide public statements, people expect the worst.

The Bittrex subreddit was eventually handed over to official exchange representatives.

But even under the unofficial moderation it was not a scary place full of desperate bullying though. Nobody even offered bribes to customer support representatives, folklore known from other exchange subreddits. People were actually very well behaved, collecting information on how to get their KYC tickets solved.

Bittrex still prioritised brand damage control to solving customer tickets though.

The issue with that was pretty clear, especially in 2017: With crypto in a locked exchange account, the trader loses out on potential profits. Because nobody can trade those founds. Except of course the exchange, purely hypothetically.

Be mindful of risks

Since BitMEX started requiring KYC in mid 2020, crypto traders have been on a hunt for the next non-KYC place with perps and defi shitcoins.

There is a new crop of shady places like ByBit (who btw don’t pay their affiliates in case that’s your jam), WhiteBit, Latoken and others. Hell, even Bitfinex could get in trouble.

Consider how and why red flags exist and when is the time run.



Posted in Psa
Tagged as      

 

Last added to Crypto Airdrops, Bounties & Opportunities
Airdropped Token or Opportunity Airdrop Date About the airdrop Link
Opportunity: DeFi Tokens on reputable exchange with lower fees 14 days after listing The Aussie exchange Independent reserve is listing new DeFi tokens these days. For each of the new markets has the fee reduced to 0.1% for the first 2 weeks. Currently those markets are yearn.finance, Aave and Kyber Network Crystal. sign up
LATOKEN Earn Nov 2020 10+ new Telegram airdrops available on LATOKEN exchange under "Earn" in the top navigation bar. (SAND, UNO, BXT, PZS, L2L, BIOG, DGB, OAP...) If you sign up with the link here you get 50 USD fee credit. sign up
Opportunity: Trade DeFi Tokens with NO FEES 14 days after signup The token exchange WhiteBit gives you 14 days of zero-fee trading if you sign up with a shill link. No KYC until 2 BTC/day withdrawal limit, lots of new DeFi projects get listed there. sign up
Staking without KYC on WhiteBit New! WhiteBit opened 17 different staking plans with 9 different currencies to choose from. 40% APR, available to the users without KYC. (Be mindful of risks) sign up
YoBit Get Free 1700 Dollars After signup YoBit is having a token giveaway. Sign up at YoBit and click the link "Get free 1700 dollars" in the top bar. This will take you to a Telegram bot where you can sign up to participate in the giveaway. sign up