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Bitcoin's Price Is Nearing $10K On a Single, Troubled Exchange

Crypto exchange WEX continues to see prices well out of step with the rest of the market amid the continuation of a near-total freeze on withdrawals.

As CoinDesk previously reported, customers of WEX – a kind of successor to the now-defunct cryptocurrency exchange BTC-e – have been on tenterhooks since July 12 as they’ve largely been unable to get outbound payments processed.

The only exceptions have been tether and zcash, and the price disparities suggest that some WEX users are utilizing those tokens as a way out. The normally dollar-tied tether, also known as USDT, is currently above $2 and WEX’s price for zcash (against the US dollar) is $440, or more than double the prevailing rate on the broader market.

Those look to convert their money held on WEX to zcash or tether just to get it out of the exchange must pay a steep price, according to one customer.

“If you buy zcash on Wex, you will have to sell it somewhere else much cheaper, losing up to 50 percent, as the USDT rate is now $2.195 on Wex,” Grigory, a systems administrator from a town in Russia called Ivanovo, told CoinDesk. Further, the ability to make withdrawals has become unavailable again from time to time, he added.

In the absence of word from WEX staff, users have taken to social media and the exchange’s chat box to wonder aloud about the story behind the delay.

Cryptocurrency prices have risen on the site as well, with the value of bitcoin exceeding $9,600 as of press time, or more than $1,400 above the price recorded on CoinDesk’s Bitcoin Price Index (BPI). Prior to the withdrawal issues, prices on the exchange had notably spiked above $9,000.

WEX representatives have not responded to multiple requests for comment.

Waiting game

The situation on WEX has been brewing for more than a week, the exchange’s own statements show.

On July 12, WEX announced on Twitter that withdrawals of fiat and cryptocurrencies were blocked due to the “database migration and other maintenance.”

Later that day, it was said that maintenance had been completed, and some coins, including zcash and tether, were available for withdrawal. But major cryptocurrencies like bitcoin, bitcoin cash, ether, litecoin and dash were to remain unavailable until July 22, according to a post on July 16.

The last public message via Twitter was posted on July 19, saying, “Maintenance has finished successfully.”

However, when July 23 came, exchange customers kept complaining that withdrawals were still blocked.

“No Withdraw is working. It is 23rd now. Maintenance fail can happen, but no information is worst. After BTCe now WEX?” said user @Pete11240362.

“Administrators, if you can’t resolve the problem right now, say: maintenance works in process. Get smart, give some feedback,” demanded Russian-speaking user Sergey Ionkin, who goes by the handle @dear_enman.

Some of the affected users took to Telegram to discuss the situation. One of the groups was promoted and possibly created by Dmitry Vassiliev, an official owner and CEO of WEX, who previously told CoinDesk that he lost control over the exchange due to the intervention of some people he declined to identify.

On Monday, a user in one of the channels claiming he is Dmitry Vassiliev – using two similar usernames, (Dmitry Vasiliev and Dmitry wex.nz) – wrote that he had agreed to register the exchange in the name of the new beneficiaries who are already de facto managing WEX.

The user claimed that the deal is going to take place on Thursday, and promised to reveal the names of those beneficiaries if they don’t fix the situation on that day. Vassiliev stopped answering CoinDesk’s inquiries after a brief exchange on July 12.

No easy ways out

According to Grigori, avenues for actually taking money off the exchange exist – but at a price.

Grigory told CoinDesk he has had 0.1 BTC waiting in limbo on WEX since July 12. He said he started using WEX in the end of 2017 because he liked that the exchange didn’t require ID verification.

For the most of time everything had worked fine, he explained: he had been able to withdraw coins within an hour or less, and fiat-denominated funds would appear in his e-payment account in several hours after the withdrawal transaction.

But that changed earlier this month, he told CoinDesk. The tech support on WEX has provided no reasonable explanation and only recommended waiting until the maintenance is over, Grigory contended.

Fiat withdrawals were ceased in that period, too, though the ability to withdraw funds via so-called WEX codes remained for a time. Users would generate a special code with their accounts and then exchange those codes for fiat currency on specialized websites, which would sent a corresponding amount of dollars or rubles to users’ accounts at Russian payment services like Yandex.Money or Qiwi.

But this is no longer a viable solution, according to Grigory.

“At some point, the offers to buy WEX codes disappeared from those exchange websites as there were enormous numbers of people who wanted to sell them,” he told CoinDesk, adding:

“Now people who wanted to quit at any price have already quit, but the exchange rate is still bad.”

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Something Strange Is Going On at a Crypto Exchange Called WEX

Users of WEX, the cryptocurrency exchange built on the ashes of BTC-e, are reporting withdrawal problems, raising new questions about an already mysterious trading platform.

“‏Dear Wex, when withdraws will enable ??” asked Twitter user Alireza Moosavi on Friday, joining a crowd of Wex customers complaining they couldn’t withdraw their funds for the second day in a row.

Ehsan Mahmoodi similarly inquired, “hello, why withdrawal is disabled?”

A third user, Hasan Gusseynov, asked the exchange, in Russian, “When will everything be ok?”

The user complaints follow odd trading activity observed on the exchange. Earlier this week, CoinDesk reported that the price of bitcoin (against the U.S. dollar) shot up to nearly $9,000 on WEX, while it was still in the $6,000 range practically everywhere else.

Observers say the anomaly could have been due to a number of reasons, from recently-raised fiat withdrawal fees on the exchange to suspicions of insolvency. As of this writing, the USD price of bitcoin on WEX was $7,451, more than $1,200 higher than the price recorded on CoinDesk’s Bitcoin Price Index (BPI).

Stepping back, WEX was launched last year in an apparent effort to resurrect BTC-e, a long-running bitcoin exchange that was targeted and eventually shut down by U.S. and Greek law enforcement officials. A Russian national named Alexander Vinnik was arrested and charged with laundering billions of dollars on BTC-e, and U.S. regulators hit the exchange with a $110 million fine.

Although WEX claimed to be unrelated to BTC-e, its website design and trading pairs were very similar and it was pitched as a service for former BTC-e customers.

Questions aside, posts on social media as well as WEX’s chatbox indicate that the withdrawal problems remain ongoing as of press time, though a note on the exchange’s official Twitter account claimed that user funds are secure.

The developments also follow a string of reports from Russian media outlets detailing the murky background of the exchange, as well as a reported legal effort filed by one of BTC-e’s former users.

Unanswered questions

In a July 12 post on Facebook, Dmitry Vassiliev – who, according to Singapore records obtained by Russian news agency RBK, is listed as the owner of WEX’s operator, World Exchange Services – attributed the price disparities to the actions of Dmitry Sutormin, who he described as a former WEX manager.

Vassiliev explained that Sutormin, a vice president of the Russian Association for Cryptocurrencies and Blockchain and a venture investor in Russia, had been selling a high number of “WEX codes,” which could be redeemed on the exchange for cryptocurrency.

Sutormin “carried out the purchase and sale of WEX codes in any volumes,” Vassiliev explained, “which means that there are a lot of codes on the market … now all those who bought those codes want to buy bitcoin, exchange rate goes up, as very few wish to sell.”

However, talking to CoinDesk via Facebook Messenger, Vassiliev said he’s not sure what Sutormin’s role is now, because, as he admitted, at some point he lost control over the exchange. He would not go into additional specifics.

And when reached via Telegram, Sutormin said that he has no connection with WEX and has never worked there.

“I bought and sold my own codes, I was, in fact, the exchange’s client,” he explained. When asked why he would sell his codes, he said he was “affected by the hype around cryptocurrencies,” adding that it’s a popular business in Moscow.

RBK recently dove into the topic during a long piece on WEX. RBK reporter Andrew Zakharov attempted to conduct such a deal, pretending that he wanted to buy a large amount of bitcoins through a meeting in Moscow and contacting Sutormin who, in turn, connected him to other people for the transfer of money.

Meanwhile, earlier this week, the Russian cryptocurrency website CoinRadio detailed a lawsuit filed by a former BTC-e customer named Pimporn Carty. The website also published a copy of the claims made against WEX.

Carty reportedly sued WEX over funds previously held on BTC-e prior to its collapse, arguing that once she was able to regain access, some of the funds went missing, including more than 11,000 litecoins. While a hearing on the issue was reportedly scheduled for July 12, and referenced in Vassiliev’s Facebook post, it’s unclear whether the meeting took place or, if so, what the outcome was.

Who’s in charge?

Indeed, statements from Vassiliev suggest that it’s not entirely clear who is in charge of WEX at the moment.

RBK also reported that Vassiliev was planning to sell the exchange to Dmitry Khavchenko, a former volunteer fighter in the war in Ukraine and a participant of the militia forces in Crimea that supported the Russian annexation in 2014.

Khavchenko, in turn, told RBK that he was going to move WEX’s office to Crimea and register the managing company in the war-torn region of Ukraine known as Donbass.

According to RBK’s sources, Khavchenko and other people engaged in the conflict in Ukraine are already involved in the exchange’s management, including people connected to Konstantine Malofeev, who has been cited in the press as one of the shadow sponsors of East Ukrainian militants.

WEX denied that the exchange is going to be sold on Twitter, and the exchange did not immediately respond to questions regarding who is in charge or why, exactly, its prices shot up earlier this week.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Bitcoin Price Spikes to Nearly $9K on Little-Known Crypto Exchange

For a cryptocurrency exchange that has seen its bitcoin price trade at a market premium since launch, the spike to nearly $9,000 on the WEX exchange on Wednesday was an outlier.

Some background: in July of last year, U.S. and international law enforcement took aim at BTC-e, the long-running – and long-mysterious – cryptocurrency exchange. In a dramatic turn, a Russian national and one of BTC-e’s suspected employees was arrested and charged with laundering billions of dollars while American regulators moved to slap the exchange with a massive $110 million fine.

In the months since, BTC-e has returned under the WEX banner while Alexander Vinnik has been the subject of a legal tug-of-war between Russia, the U.S. and, now, France, each of which is seeking to extradite him. Vinnik has that he is innocent of the charges levied against him.

Yet Wednesday’s move is a curious one, with the price of bitcoin (against the U.S. dollar) on WEX climbing to $8,999, as shown in the graph below:

By contrast, CoinDesk’s Bitcoin Price Index (BPI) hasn’t climbed above $6,396 since the start of trading on July 11.

The sharp increase started around 16:00 (UTC) from a comparatively high price point of about $7,800. To put things in perspective, Coinbase, a competing US-based crypto exchange, featured bitcoin prices throughout the entirety of the day between the range of $6,200 and $6,400.

So what gives?

As might be expected, the unexpected surge stoked speculation that WEX is either insolvent, suffering banking problems or gearing up for a calculated exit. BTC-e’s long-mysterious reputation and links to the now-defunct dark market Silk Road may arguably have provided fuel for such allegations.

The move also comes a day before WEX will undergo a planned maintenance period scheduled to last for 2 hours, according to a post on Twitter from July 9.

For its part, the exchange hasn’t commented on its public-facing channels about the price spike, and a message sent to WEX’s official account on Twitter wasn’t returned by press time.

Bitcoin image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.