Proof of Keys Event May Highlight Centralization of Crypto, but Some of Its Claims Are Unfounded

Bitcoin celebrated its 10th birthday on Jan. 3, and in commemoration of this milestone, the very first Proof of Keys event was held. Organized by crypto investor and podcast host Trace Mayer, it urged cryptocurrency traders to withdraw their holdings from crypto exchanges, in order to promote the decentralization and monetary independence on which Satoshi Nakamoto's vision for Bitcoin was founded.

However, as ostensibly positive as its message was, it was claimed on social media in the days leading up to the event that several exchanges — most notably HitBTC — had apparently been freezing accounts and preventing users from withdrawing their funds.

These are serious charges, but while they raise questions about who really owns the coins traded via big exchanges, the issue could be more complicated than HitBTC's detractors would have everyone believe. For one, exchanges have a record of halting withdrawals and freezing accounts as part of their normal business, so it's not certain that HitBTC or any other exchange was specifically opposing Proof of Keys and trying to prevent a mass reclamation of Bitcoin. And secondly, it's worth pointing out that Proof of Keys is not a grassroots, community-led event. Rather, it’s an initiative spearheaded by entrepreneur Trace Mayer, who happens to be an investor in Armory, a crypto wallet manufacturer that obviously has a financial interest in people taking their coins out of exchanges. As such, his claims of widespread account blockages should perhaps be treated with scepticism.


The suspicion that HitBTC was blocking accounts and withdrawals because of Proof of Keys emerged on Reddit and Twitter. On the HitBTC subreddit, most of the current posts have been made by users complaining that they've been unable to withdraw their crypto. On Jan. 1, for instance, Reddit user pedxs wrote that HitBTC is "now not allowing withdrawing, even for [my] accounts that passed KYC," while other users have reported similar issues, in addition to claiming that the exchange is fraudulent in general.

Unsurprisingly, these reports have led to a vociferous reaction from those organizing and supportive of the Proof of Keys event. On Jan. 2, Trace Mayer noted on Twitter that a "friend" had been told by HitBTC that "Withdrawals are temporarily disabled on your account," leading him to suggest that "@hitbtc failed #ProofOfKeys."

Similarly, John McAfee — who also has a financial interest in a crypto wallet (Bitfi, which he was paid to endorse) — was quick to vent his spleen against the exchange. He wrote on Twitter:

Complicating the issue further, Trace Mayer also reported Proof of Keys "failures" at Coinbase, Poloniex, Bitfinex, and (an escrow service and online marketplace, rather than an exchange). However, there really isn't much online that would confirm widespread problems (at least not on the scale of HitBTC).

For example, in the Coinbase subreddit, there is currently one post from someone bemused as to why a 72-hour quarantine on withdrawals had been imposed on them, yet there is nothing else from the period before and after Proof of Keys that would suggest something unusual or untoward. Much the same goes for the PoloniexBitfinex and subreddits, although in each of these it was hard to find even a single complaint (there was