BitForex, a Hong Kong-based cryptocurrency exchange, has recently faced significant disruptions as it abruptly went offline following the mysterious withdrawal of $57 million from its hot wallets. The situation was first brought to light by the blockchain detective ZachXBT, who noted the cessation of withdrawal transactions and the apparent unresponsiveness of BitForex's team.

Withdrawal Mystery and Exchange Disruptions

Efforts to access BitForex's official website have been met with a message indicating blocked access, exacerbating concerns surrounding the exchange's operational status. This development follows warnings issued by Japanese regulators last year against BitForex and other exchanges, including Bitget, MEXC Global, and Bybit, for operating without proper registration. Moreover, in 2019, Chainalysis reported suspicions of inflated trading volumes by BitForex.

The situation escalated further when, a day before halting withdrawals, approximately $56 million worth of cryptocurrencies were withdrawn from BitForex's wallets. ZachXBT detailed that three of BitForex's hot wallets experienced outflows totaling about $56.5 million in cryptocurrencies before the exchange ceased processing transactions.

Since May 2023, there have been no updates from BitForex's social media accounts, and users have reported various issues, including being unable to access their accounts and encountering blank dashboards. Some users have also shared screenshots indicating they have been blocked from accessing the company's website.

Japan's Financial Services Agency and BitForex's Unregistered Operations

In September 2023, BitForex ranked among the top global crypto exchanges by capitalization, boasting a daily trading volume of approximately $2.6 billion. However, CoinMarketCap no longer provides live data on BitForex.

Earlier in April 2023, Japan's Financial Services Agency accused BitForex of violating the country's fund settlement laws by operating without proper registration. However, there has been little to no significant regulatory or media attention on BitForex since then.

This incident occured amidst broader concerns within the cryptocurrency industry, including the recent actions of another Hong Kong exchange, Atom Asset Exchange (AAX), which moved around $55.6 million worth of Ether from its wallets. AAX ceased all operations on November 13, 2022, shortly after the high-profile bankruptcy of FTX. Following the shutdown, AAX's CEO, Thor Chan, and Board Member, Haoming Liang, were arrested by Hong Kong police. The Founder of AAX, who remains unidentified, allegedly remains at large with substantial user funds and access to exchange wallets.