Are Cryptocurrency Exchanges Trying to Sabotage BitShares?
In early October the popular cryptocurrency exchange Bittrex announced they would be delisting all of the BitShares (BTS) trading pairs (ETH/BTC, BTC/BTS) from their exchange.
The announcement took many by surprise as BitShares had been trading on Bittrex since the exchange started operations. BitShares is not a new coin, in fact it is considered a “legacy” coin because it has a proven platform, active community and has been around since 2013 — before Bittrex was even an exchange.
In fact, just up until the announcement BitShares had been among the top ten highest traded tokens by volume on the Bittrex exchange, and was one of the original coins that it had listed when starting their exchange business.
Graphene powered BitShares and Steem process more transactions than all other blockchains combined, making them the most used blockchains on the planet. Therefore, it is safe to say that many BitShares investors were shocked when Bittrex announced they would be delisting BitShares.
BitShares holders were forced to remove all of their BitShares from the exchange and all BitShares trading on Bittrex has ceased. As a result, $150 million was wiped off the BitShares market cap, almost instantly.
Only a few months prior, BitShares was in the top 10 in market cap, was one of the highest traded by volume coins, and had experienced a dramatic rise in price. It is curious that the popular cryptocurrency would be delisted almost inexplicably. Even more curious is the timing.
BitShares had recently announced several businesses that were migrating to the BitShares platform as well as the expansion of the BitShares Foundation. The Foundation’s mission is to promote, advocate and grow the BitShares ecosystem to its full potential. With all of this good news, legitimate growth and success, why would Bittrex delist BitShares out of the blue?
As of the writing of this story, Bittrex still has not removed BitShares from their marketplace, only disabled the wallets. One must note, that all other tokens listed in the October 03rd announcement were in fact delisted and removed from the Bittrex marketplace.
The odd treatment of BitShares isn’t exclusive to Bittrex. This past week there were allegations made that Poloniex has been manipulating the price of BitShares on their exchange, in order to suppress the price.
Cryptocurrency exchange, Poloniex has been disabling BitShares wallets for outgoing transactions suspiciously when the BitShares price begins to rise. Twitter erupted with outrage, as Poloniex users and BitShares investors began calling the exchange out for their bizarre handling of BitShares.
The disabling of BitShares’ wallets on Poloniex certainly has evoked anger, however these incidents have been going on for months. According to posts on the blockchain based social media site Steemit, these wallet issues go back at least five months.
Here is the notification Poloniex users received from the exchange when trying to access their BitShares.
“BTS is currently under maintenance or experiencing wallet/network issues. Deposits and withdrawals will remain disabled until a solution is found, which may require an update from the BTS team. Any updates must be tested and audited before enabling.”
The BitShares team has publicly denied that there was any technical issue on their end.
Poloniex itself has not provided the community with any clarification as to what the “wallet/network issues” are. This lack of transparency has many investors concerned and is fueling speculation. Even more bizarre is that Poloniex has seemingly refused to cooperate or even respond to the BitShare’s DEV team regarding the issues.
What is behind the unusual handling of BitShares from these two exchanges?
Exchanges often experience outages and maintenance however, the emerging correlation between outages and the price of BitShares is concerning. Could Poloniex be purposefully manipulating the price of BitShares for profit? Why would Bittrex delist the cryptocurrency out of the blue? Is there a motive behind this behavior?
For those readers who are not familiar with BitShares, BitShares is a decentralized exchange platform. Traditional exchanges like Poloniex and Bittrex are centralized. This means that the company has control over your private keys.
In the world of cryptocurrency, private keys are literally the keys to the kingdom. Whoever controls the private keys controls the funds. Using a centralized exchange, you must rely on a third-party to secure your funds. This can be very problematic. Many investors have had their funds lost or stolen by centralized exchanges.
The most infamous investor loss was the Mt Gox Bitcoin exchange. In February of 2014, Mt Gox, the largest Bitcoin exchange at the time, abruptly suspended trading, filed for bankruptcy and announced 850,000 bitcoins, belonging to its customers, were missing.
BitShares is different. Decentralization gives BitShares robustness against failure. When a centralized exchange is compromised, millions of dollars and thousands of users are impacted all at once. In a decentralized system, any attack or failure impacts only a single user and their funds. Unlike a centralized exchange like Poloniex or Bittrex, the DEX gives users control over their private keys, meaning they have complete control over their assets.
The core currency for the BitShares platform is BitShares (BTS). BTS derives its value from the demand for BitShares services. BTS also acts as a form of collateral and helps ensure the liquidity of Market Pegged Assets. By purchasing BTS you are buying a stake in the success of the platform.
Could it be that exchanges like Poloniex and Bittrex feel threatened by BitShares and they want to suppress the platform by manipulating the core currency? This is pure speculation at this point, but the world is moving towards decentralization and that includes exchanges. BitShares is not only a competing exchange but it is a new approach to exchanges all together.
Perhaps it is the transparency the BitShares DEX provides. Cryptocurrency exchange Bitfinex is currently being scrutinized for using cryptocurrency USDT to launder money. Many of the popular cryptocurrency exchanges are enjoying the fruits of a loosely regulated industry.
Earlier this year there was an announcement of the forming of The Token Exchange Self-Regulating Body (TXSRB). The TXSRB is a non-governmental organization with power to create and enforce industry regulations and standards, with the greatest focus on the protection and education of investors.
The idea behind the TXSRB is that the cryptocurrency industry needs to be regulated and regulation should come from those who know the industry best. The organization is focusing on categorizing tokens as non-securities using a “clean list”. Interestingly, BitShares was one of the first tokens added to this list. As an unrelated consequence, this essentially made BitShares the safest exchange in the world. The expressed mission of the TXSRB is as follows:
“Our mission is to educate and protect coin investors from financial harm and to ensure that there is a fair and transparent way for exchanges to operate in the trading of digital tokens.”
BitShares has already been approved by the TXSRB and it seems the exchange is free and clear for operation.
If the other centralized exchanges are worried about their future regarding regulation, the competition of decentralized exchanges or both, BitShares would be a prime target. Could we be witnessing the first shots in a larger crypto war between BitShares and the current big boy crypto exchanges?
At this point the intentions of Poloniex and Bittrex remain unclear but it is important to ask these questions as there seems to be a continuing of odd behavior surrounding BTS. If there is a secret crypto war brewing, it could quickly escalate.
The only way to know for sure is for Bittrex and Poloniex to be clear and transparent regarding their handling of BitShares.
If you are interested in learning more about BitShares and the BitShares DEX visit bitshares.org
Other companies recently adopting BitShares Graphene include: