Binance Freezes Assets From Two Accounts Linked To Troubled WEX Exchange


Recently, Binance, the largest crypto exchange in the world, has decided to freeze two accounts with more than 93,000 ETH in them. Why? Because they have received that money from the troubled Russian exchange WEX, which is surrounded by problems. This story tells an interesting tale of how transparency can be used to make the market better.

The blockchain technology has a lot of potential and we often keep going on and on about its future and potential, but one of the most beautiful things of decentralization is what we can achieve right now. Looking at a recent case of Binance freezing the accounts, we can see many problems, yes, but also how awesome the transparency created by cryptocurrencies is.

The Case

On October 25, Binance froze the money from the two accounts. Why? Because users from the WEX exchange had been monitoring this money, which was kind of theirs. “What”, you ask? Well, the WEX exchange, which was the successor of the now-defunct BTC-e exchange, did not let many of its users take their funds away from the platform’s wallet and they believe that these are their funds.

By moving the money to Binance, they would allegedly intend to keep the ETH for them while the customers would still be waiting forever to withdraw. If confirmed, this can basically be a criminal move from the exchange owners.

According to the users who complained with Binance, they have been using the transparency of the Ethereum blockchain to trace the money from the WEX exchange from wallet to wallet and they perceived that the money went to Binance. WEX did not allow withdraws since July without actually explaining why, which has prompted many users to file police reports against the company.

Fortunately, with the decentralization of ETH, anyone could easily track the money which belonged to more than a thousand users. According to the police reports, at least 400 filed complaints. As users have been unable to withdraw their money for months, ETH has lost a lot of value since then, which means that some of the losses cannot be compensated, but some of the ETH may be recovered.

About BTC-e and WEX

WEX’s history is full of trouble. BTC-e, the original company, was shut down last year as the United States government slapped it with a multi-million dollar fine after being involved in the money laundering of the money that was stolen from Mt. Gox.

A new company has emerged and it looks like they decided to scam their users after operating normally for about a year. Many of the prices in the exchange were highly inflated, too, which was highly suspicious.

Binance has officially affirmed that it would investigate the claims but that it was not familiar with the situation at WEX and that it could not do anything. While WEX’s customers lost their hopes, the exchange did freeze the accounts, though.

They only knew about when the CEO of Binance, Zhao (CZ) Changpeng was asked of the issue on Twitter and the company provided its official stance on the matter. He said that the accounts were frozen and asked people to report to law enforcement what had occurred. After this, they would work with the police to give the funds back to the people.

CZ has affirmed that “hated this part of centralization” because they had to deal with “other exchange’s mess (we don’t even know the details)”, but affirmed that he would do what he could.

The Money Trail

Coindesk has followed the money trail and, indeed, it found out that the two wallets that received the money got it from addresses that lead back to a wallet previously controlled by BTC-e. The report finds clear evidence that the money came from there. This was confirmed as Etherscan linked the wallet to the brand.

The transactions started on July 29, 2017, when 485,705 ETH was transferred from the BTC-e walet to another one. A series of transactions happened later and the ETH was sent in many large transactions to a single address which belonged to WEX (screenshots sent by users proved it). Eventually, the money was sent to the two wallets in Binance.

Luckily, the alleged scammers were dumb enough to send the money to a centralized wallet that could freeze it, so there is hope for the users.

While this could be a tale of sadness, it is also a tale that shows how the blockchain technology can often be used for the exact opposite of what the critics say: to bring security and transparency for the users.

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