The global crypto exchange HitBTC has recently decided to appeal to cryptography in order to defend itself against the team behind Bitcoin Private (BTCP) in a court case.
It all started when the major exchange, which is described by CoinMarketCap as the 15th largest of the world by trade volume, was accused of fraud by the Bitcoin Private development team. This happened because the team was unhappy that their token was delisted from the trading platform.
Now, as despite is being decided in court, the exchange decided to use cryptography in order to prove how it is innocent from the accusations made by the BTCP team. The exchange claims that the altcoin dev team had offered it an “unsuitable solution” for handling its scheduled coin burn.
HitBTC defended itself in a blog post called “Explanation of the situation with BTCP”. Basically, the exchange accuses the BTCP team of creating a custodial risk which could put the whole company and its clients at risk and instability if nothing was done to solve the problem.
The major issue is that earlier this month BTCP decided to burn some tokens. This would not cause a scandal if the company simply did not forget to actually share the code of the assets with the exchange and provide some support for the move. HitBTC had some tokens in its custody burned.
HitBTC then compensated the users who got their tokens burned with its own money and then accused BTCP of not being compliant with its rules, which prompted the team to accuse HitBTC of having “fraudulent activities” and extortion attempt.
Now, HitBTC claims that people can still withdraw their BTCP from the site, but that the token will not be traded anymore because of the whole coin burn issue.
The Coin Burn
BTCP was a hard fork from ZClasssic (ZCL), another not so famous altcoin. Since its inception, the coin burns were a part of the company’s plans and there was an event which was planned for last month. This event would burn all tokens which were not either claimed or moved since the hard fork happened and was the catalyst for the trouble.
Prior to the event, HitBTC contacted the dev team in order to protect the client’s funds. They did not get any support, which prompted them to ask for 58,920 BTCP afterwards since they had to use their own money to pay for the coin burn, around $17,600 USD.
The official answer from the altcoin team is that the 58,920 BTCP which was lost was being secretly held in storage in a Segwit wallet. They affirmed that they were “threatened” that they would be delisted if they did not compensate for the exchange, which was exactly what happened.
Now, the two companies are facing each other in court and the law will decide how to solve this issue. Will HitBTC’s appeal to cryptography actually work as the judge will analyze the technology and determine that they are right? We’ll know soon.