Just as the Proof of Keys movement looked to be picking up steam, HitBTC has decided to freeze a number of users accounts and block withdrawals. HitBTC is well known for its frequent account freezing practices, but this new wave of frozen accounts ties in with the Proof of Keys deadline and smells rather fishy if you ask us. Trace Mayer – the man behind the Proof of Keys movement – called out HitBTC on Twitter, but has yet to receive any official reply from the crypto exchange.
Is this a case of an exchange looking to scupper a plan for financial freedom or is there a reasonable answer behind the mystery?
Has @hitbtc failed #ProofOfKeys? I do not have an account. Asked a friend to initiate a withdrawal. BEWARE! ?
Result: “Withdrawals are temporarily disabled on your account.”https://t.co/J3HMHKA1ah@maxkeiser @ToneVays @theonevortex @SatoshiLite @Excellion @CaitlinLong_ @nvk pic.twitter.com/wsXKiOlEJF
— Trace Mayer [Jan/3➞₿?∎] (@TraceMayer) January 2, 2019
What is Proof of Keys?
Proof of Keys is an incredibly popular movement that has picked up pace in the last few months, but it’s rather surprising that it’s actually a thing. Put simply, Proof of Keys is a movement by Trace Mayer to encourage people to shift their crypto away from crypto exchanges and onto their own personal private wallets. This is already the best practice that any crypto hodler should follow, and it’s shocking that so many people are only just moving their money away from crypto exchanges.
What is the Point?
When you store your cryptocurrency on an exchange, you don’t control the private keys, and as such the exchange has all the power. They can freeze your account and funds – just like HitBTC has done in this case – and they act as a sort of bank, restricting your financial control. By removing your funds from a crypto exchange you give yourself total financial freedom, plus comfort in the knowledge that nobody can ever take your money from you again.
A Plausible Reason Behind the Freeze
There is a good chance that HitBTC has frozen accounts and blocked withdrawals to give itself time to gather everyone’s funds. Just like any bank would, crypto exchanges only carry a certain amount of cash in their hot wallets at any given time to protect themselves from attacks. This means it might take additional time to get the required amount of fiat ready for users to withdraw – just like if you want to pull out a large sum from the bank.
However, this might not be the case with HitBTC. It’s known to be a rather shady crypto exchange, and many traders avoid using it where possible. Proof of Keys could have uncovered a crypto exchange that doesn’t hold the correct amount of crypto for all of its depositors – similarly to the Tether issue. This would be devastating for the crypto exchange and would likely see it go down the same route as Mt Gox.
Multiple members of the crypto community have called out HitBTC, including John McAfee. McAfee said that he gave everyone six months warning, and now it’s tough luck. Hopefully, this is just a phase and withdrawals will be back live within a few hours. If not, it’s probably time to start looking for a good lawyer.
I warned everyonw more than a dozen times. Don’t sign up. Don’t use it. Withdtaw your funds. I was trashed for calling out HitBT as a corrupt cimpany. Tough shit. You had six months warning from me to withdraw your funds. Do not ask me to help you now.https://t.co/Ls9mzpUSbz
— John McAfee (@officialmcafee) January 2, 2019
