HitBTC clarifies about insolvency and AML/KYC procedure, among other things

26 May, 2019 | Updated: 26 May, 2019
by Fifi Arisandi
HitBTC clarifies about insolvency and AML/KYC procedure, among other things

Following the recent publication about HitBTC’s insolvency, strict AML/KYC procedures that are protested by many of their users and poor customer support, among other things, the team finally speaks up.

In a blog post written by board member, Joan Gald, the exchange addresses each of the rumors and accusations they’ve been facing lately.

Gald started with a background as in the time when it was all started in 2013, which she said, “We were among the first and one of the most technologically advanced exchanges.”

Among the company’s achievement in technological and security aspects, she admits that HitBTC has been neglecting their public communication/PR, which she refers as their “major omission”.

She also said that her team’s reluctance to deal with “anonymous cases and other general allegations lacking substance” on the “anonymous Internet space” by letting them “slide” has made HitBTC “a target for various provocative statements". 

Quoting her statement, “To summarize, the combination of technological advancement and self-imposed communication isolation has repeatedly made HitBTC a target for various provocative statements, both genuine and motivated otherwise.”

Gald refers to a news article that claimed them of freezing customers’ accounts ahead of Proof of Keys event, on which she said that it was written only based on only 2 AML cases.

“One of them was initiated as part of the investigation into the December, 2018 BTCP security breach, at the request of the coin’s core team. Unfortunately, there is no clear indication of the nature of the second case that can be discerned from the article,” she said.

She then begins to address to insolvency rumor, which she claims to be based only on 3 AML cases and social media gossip as “all quoted AML cases were resolved within 3, 12 and 33 days respectively”.

“Obviously, a subset of hot wallets’ balances are not representative of exchange’s total assets,” she said further, suspecting that “someone has been motivated to openly harm our reputation”.

Moving on to the AML/KYC topic, Gald said that since the crypto market is progressively becoming more like a regular financial market, it makes it the subject to practices common to legacy financial institutions, such as the enforcement of prudent AML/KYC policies and procedures.

The ultimate goals are to protect market participants and to eliminate of “bad actors”.

With such goals in mind, HitBTC decided to apply a strict AML/KYC procedures, which in return, has earned them the allegations of “inappropriate suspensions or significant withdrawal delays”.

In her defense, however, she claims that the allegations always fall in one of 9 categories, they are:

1. AML cases that indicate suspicious activity on a user account and require a manual check

2. Bad actors using fake documents or counterfeit materials for verification purposes.

3. Deposits to the wrong address.

4. Victims of phishing.

5. Rare cases of account suspension due to a law enforcement request in which we are explicitly prohibited from informing the user in question about the matter.

6. Law enforcement requires us to freeze assets without explicit prohibition from informing the user in question.

7. A third-party request claiming their funds are involved in fraudulent activity.

8. Loss of access to 2FA device.

9. A separate category of cases that cause deposit/withdrawal delays on a subset of assets have to do with comprehensive custodial security infrastructure and technical issues of daemons.

“We believe in a future filled with self-sustainable Internet and virtual reality economies and we have actively been creating its vital infrastructure for many years,” Gald stated.

She again reiterates how the company’s decision to “focus on the things we consider to be fundamental” and neglect public relations, which includes responding to public accusations have costed them all the bad publications they’ve been getting recently.

In one last chance, she emphasizes that her team has learned from their mistake as she said, “We are constantly on the lookout for public communications talent with or without experience in blockchain technologies.”

Stick with Chepicap for further developments on HitBTC.

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