Binance Freezes 93,000 ETH Connected To Suspicious WEX And BTC-e Wallets

Binance's Leah Li announced that accounts which received 93,000 ETH from August 2018, have been frozen on the exchange on October 25th.


Binance’s Leah Li announced that accounts which received 93,000 ETH from August 2018, have been frozen on the exchange on October 25th.

Binance Freezes 93,000 ETH Connected To Suspicious WEX And BTC-e Wallets
Source: Coindesk

The move was forced by WEX exchange users as they have been tracking transactions of Ether (ETH) from the exchange while not being able to withdraw their own funds, which raised their suspicion.

Chronological breakdown

Everything started when BTC-e cryptocurrency exchange was shut down by the US Government for laundering of cryptocurrency stolen from Mt. Gox, receiving a $110 million fine in the process.

The Russian cryptocurrency trading platform WEX succeeded the BTC-e exchange, and, however strange that may sound, inherited its infrastructure, despite the fact that it has been proclaimed as inconsistent with the laws of one of the world’s most significant markets.

WEX started operating in July 2017, but since July 2018, all top cryptocurrency withdrawals from WEX have been suspended until the date, and, understandably, users became anxious as the likes of Ether (ETH) and Bitcoin (BTC) are the cornerstone coins for crypto trading.

Lately, WEX clients hit by the ETH withdrawal suspension started to track the flow of Ether from the exchange and found out that, although ETH withdrawals have been disabled for hundreds of users, some addresses have been pulling large amounts of Ether out of the exchanges hot wallets.

The astonishing revelation

What users found out is astonishing.

According to the Ethereum blockchain, two addresses, controlled by entities connected to WEX, have been sending Ether to Binance from August to October, allegedly putting at risk at least $28 million worth of WEX clients’ Ether.

The first transaction happened on July 29, 2017, when 485,705 ETH was transferred from the BTC-e address to what investigating users believe to be WEX’s first wallet.

From there, the amount of 480,000 ETH was sent to the address:

0xb3AAAae47070264f3595c5032eE94b620A583a39 (Address 1) confirmed to belong to WEX, in 32 transactions, from September 2017 through January 2018.

However, 184,772 Ether from BTC-e was transferred to the address 0x95cDdecd01856aA896426bd1ee021D87F3A5c199 (Address 2), and subsequently, to several different destinations.

Eventually, the aforementioned mentioned addresses (Address 1 & 2), after a dozen smaller transfers, sent a very notable amount of Ether to the address identified on Etherscan as Binance’s.

The first transfer was worth 78,581 ETH, while the second account moved 14,794 ETH to the exchange, separated in three transfers happening on October 15h, October 18th, and October 22nd.

Users took the matter into their own hands

Naturally, users motivated by the fear for their funds tried to contact the WEX exchange numerous times, but to no avail, so they have been forced to take further steps to resolve the issue.

The first was to file police reports in the desperate attempt to reach their funds, followed by the official complaint filed with Binance in order to receive assistance in their struggle.

After the starting period of indecisiveness, further motivated by the possible money laundering scandal, Binance answered affirmatively.

Binance CEO Changpeng Zhao “CZ” took to Twitter, stating:

“The identified accounts are frozen, please report to law enforcement and have a case number. We will work with LE. This is part of centralization we hate too, dealing with other exchange’s mess (we don’t even know the details). But we will do what we can,”

Binance also emphasized that they cannot freeze accounts for the long-term without the explicit input from the authorities.

WEX overcharges the withdrawals of other cryptocurrencies while the trading volume sinks

In case you were wondering, users were able to withdraw Tether (USDT), Zcash (ZEC), Namecoin (NMC), and Peercoin (PPC), but the with such high fees that that can hardly be considered as an option.

Furthermore, it is important to mention that Bitcoin and Ether are trading at ridiculously high and disproportioned prices on WEX. Bitcoin was trading around $8,600 (38% higher than the market price), and Ether at $320 (56% higher than the market price).

Binance Freezes 93,000 ETH Connected To Suspicious WEX And BTC-e WalletsWhile Dmitrii Vasilev, who is still signed as the owner and the CEO of WEX in Singapore, refuses to talk to the press, his exchange’s daily trading volume sank from tens of millions to the modest $1 million.

Despite all the facts that say otherwise, it has been rumored that WEX has been sold to Dmitry Khavchenko, so Vasilev didn’t have the control over it when funds got frozen.

Nevertheless, whoever the real owner is, we hope that he will do the right thing and enable users to withdraw their funds and stop deepening the users’ understandable mistrust towards centralized exchanges.

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