Bitcoin Private Team Accuses Crypto Exchange HitBTC of Fraud After Delisting
Bitcoin Private (BTCP) developers have accused cryptocurrency exchange HitBTC of fraud in connection with the recent coinburn.
The accusations are portrayed in a letter written on Feb. 26 to the exchange by the Petros Law Group on behalf of the BTCP community, developers and contributors, and published by the Bitcoin Private Twitter profile on March 9.
According to its authors, the letter — which was published the day BTCP was delisted from HitBTC — alleges that HitBTC attempted to extort BTCP following unresolved complications arising from the coinburn.
According to the document, at the beginning of March last year, BTCP was created in a fork from ZClassic (ZCL) and Bitcoin (BTC) with a notice of a future coinburn in its whitepaper: the scheduled event was meant to delete (or “burn”) all the coins which haven’t been claimed (or moved) since the fork. On March 3, 2018, the day after the launch, HitBTC reportedly charged the BTCP team a listing fee of half a million dollars in Bitcoin.
The document includes screenshots of apparently since-deleted tweets in mid-February from HitBTC, which explained to users that since the exchange’s BTCP addresses were created after the fork took place, users won’t be affected by the coinburn.
On Feb. 15, one day before the coinburn was planned to happen, HitBTC reportedly contacted BTCP requesting assistance to protect its users’ funds in a series of emails, which then escalated into a request for compensation of 58,920 BTCP to be given after the coinburn due to expected losses.
However, as the document underlines that BTCP addresses created after the fork will not be affected, the exchange cannot have been concerned about users’ loss of funds, as that situation did not exist. Instead, the document alleges that HitBTC secretly held 58,920 BTCP in a BTCP Segwit wallet, and the concerns over the coinburn were related to the exchange’s personal funds.
The document further claims that BTCP developers informed the exchange that they didn’t intend to accommodate the compensation demand, but did provide technical assistance — shown with email screenshots — meant to help protect the funds from the coinburn.
On Feb. 17, the coinburn reportedly happened, one day after it was forecasted, and on Feb. 21, HitBTC allegedly threatened to pull BTCP support if the coin’s development team did not compensate 58,920 BTCP.
HitBTC has released a statement on its official blog on March 9 stating that the BTCP team was unable to provide a safe way to move the funds before the burn, but that the exchange has compensated all the custody losses. HitBTC has not responded to Cointelegraph’s request for comment by press time.
As Cointelegraph reported in December last year, during the import of Bitcoin chain data, an additional 2.04 million units of altcoin Bitcoin Private were reportedly secretly coined.
The discovery was later confirmed by the coin’s developers, who stated that the findings were mathematically accurate but “at this time, the source, purpose, and recipient of this exploit is currently unknown.”