It was recently brought to our attention on Twitter ( also cryptocurrincie's forum),many in the cryptoverse have been having issues with Bittrex. Still many titles in bitcointalk.org reports the issue_ For those of you who have had the misfortune of having #BittrexTrouble or even #bittrex_disabled_accounts, this post will likely come as no surprise to you. For those who are unaffected (and really for those who are) there are some lessons we can take away from this situation.
Let’s first get some background info/a timeline of sorts:
April 2, 2015 was the last time that Bittrex updated their Terms of Service. There we find in Section 21 Governing Law, where they state that they are located in the United States and therefore subject to US law. If you choose to access or use the Services and Bittrex Materials from locations outside the United States, you do so at your own risk and are responsible for compliance with all applicable laws, rules and regulations.
At your own risk. Check. Continuing on.
On October 30, 2016 Bittrex stated in an FAQ post on Withdrawal Limits and Troubleshooting that they enforce “withdrawal limits to protect customer accounts and to comply with federal and state laws and regulations” and later in that same post specify that new/unverified accounts will have a withdrawal limit of 0BTC.
New/unverified = 0BTC can be withdrawn. Got it.
In reading various forums, tweets, Facebook posts, etc, it’s not hard to find that many of the users with disabled accounts actually had verified and even enhanced verified accounts. So why were the accounts disabled?
The last official statement on disabled accounts made by Bittrex was on October 17, 2017:
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. The total number of suspended, closed, or banned accounts is very limited: less than 0.1% of the total accounts on Bittrex. More than 99.9% of Bittrex accounts are unaffected.
An occasional compliance review? Did they say in 2016 that they would enforce limits to comply with federal and state laws but wait almost a year to conduct a compliance review?
Bittrex posted the following Important Information About Identity Verification on December 05, 2017:
Over the past couple of months, Bittrex has been in the process of improving its identity verification procedures. There are a number of reasons to improve our processes, including that improved identity procedures help protect Bittrex users from theft and fraud, and prevent abuse of the Bittrex platform. In addition, Bittrex must comply with the Bank Secrecy Act, U.S. economic sanctions laws, and other legal and regulatory requirements. Bittrex takes these compliance obligations seriously. We are committed to making sure our services are not used to launder money, support terrorism, commit fraud or other illegal activities.
So in improving their procedures and processes, did they find a reason to disable accounts that were previously verified? Did they find that they were not compliant with US regulatory requirements previously so they were re-examining all verified accounts? Did they find some other reason to disable accounts (such as OFAC flagging)? These questions aren’t our conclusions. They have been asked by many online in groups and forums and directed to Bittrex. The company’s reply? …crickets chirp… Yeah, we’re still waiting too.
On December 12, 2017, the Better Business Bureau began looking into the pattern of complaints and opened a case three days later.
Brittrex responded to BBB to state the reason for these complaints is the company’s commitment to follow the recent U.S. regulatory requirements to comply with the Bank Secrecy Act has created a backlog in their support response as they work to verify the identification of their customers. The company has stated they have or are working on increasing their staff support to handle the surge and hope to resolve the issues as soon as possible.
Great! Increasing staff to help handle the surge of support tickets. Now we will get answers. Right?
In an article on cryptonewsmonitor, Hadi Nemati, a cryptocurrency researcher in Iran working at Blockchain Match, stated that:
All Iranians who had accounts on Bittrex were all disabled and suspended. It’s been more than four months that there has been no response.
No response.
Let’s pause there for a moment: US sanctions against Iran began in November of 1979 and in 2013 Congress voted to toughen those sanctions. To be compliant, Bittrex should have never allowed for users in Iran (or other US-sanctioned nations) open accounts to begin with. Was Bittrex unaware of these sanctions? Were they counting on Iranian citizens to know US law and their ramifications? Why in just the last few months have these accounts been frozen/disabled/deleted? This must have been one of those ‘occasional compliance reviews’ that they mentioned in October of 2017, right?
Not everyone is accepting Bittrex’s explanation of compliance to US regulatory requirements. Italian-American “Cryptodamus” Vincent Briatore, long-time user and supporter of Bittrex has had his account frozen. Briatore, who lives in New York (which is not one of the 29 “restricted states” listed in Bittrex’s TOS), previously had no problems with Bittrex. He stated in his YouTube video that he isn’t buying the “fishy” compliance excuse. In his real, honest, and sometimes humorous video, he warns new users to stay away from Bittrex.
A user told Business Insider how “This is a big deal because when you sign up with Bittrex, they allow you to deposit funds into your wallet and even allow you to trade without Verification. But then you cannot withdraw your funds. Even worse, no response from anyone. Bittrex is in the top 3 largest crypto exchanges and this is unacceptable.”
The silence is unacceptable, deafening, frustrating, and certainly not helpful to any of the thousands whose accounts have been disabled. Customers are left wondering if they will ever again have access to their funds. We have asked Bittrex. We, too, have been met with silence. Should we get a reply, we will follow up here.
Whatever you do - do NOT leave money on the exchanges. Always withdraw your coins and put them in your own private wallet where you have the public and private keys.