Users of the long-troubled cryptocurrency exchange WEX have begun filing police reports after more than three months of being unable to withdraw major cryptocurrencies or fiat, CoinDesk has learned.
A WEX trader named Ruslan, who has been encouraging other users to seek an official investigation, told CoinDesk that as many as 35 such reports have been filed thus far online through the website of the Russian Interior Ministry. At least seven such reports have been filed since October, based on confirmation numbers reviewed by CoinDesk and checked against the Interior Ministry’s website.
The fact that users of a cryptocurrency exchange that has operated at the fringes of the market would seek help from the government is itself notable. WEX was built on the ashes of BTC-e, a shadow exchange that ultimately collapsed after U.S. officials seized its domain and then slapped BTC-e and its suspected operator with a massive $110 million fine.
But this summer, the initial enthusiasm around what was effectively a rebirth of BTC-e gave way to growing complaints around withdrawals, which manifested in sky-high prices well beyond those reported on more well-known exchanges. Those issues continue to this day, with the price of USDT – a controversial stablecoin that lost its parity with the U.S. dollar last week – trading for a whopping $6.99 on WEX.
As such, WEX traders – after months of demanding answers (WEX’s last public message on Twitter was posted in late August) – are taking matters into their own hands, seeking an investigation in an effort to get their money back. What’s more, recent developments continue to further stoke questions over who is actually running WEX and, by association, who is safeguarding user funds.
Ruslan told CoinDesk that he hoped to make law enforcement take measures against WEX’s CEO Dmitri Vasiliev and “his conspirators” to prevent them from initiating any new projects in crypto.
“The main idea has been to show other users that they are not alone, that we can act together and fight for our rights by legal means,” he said.
Neither WEX’s CEO Dmitrii Vasilev nor WEX’s official Twitter account responded to CoinDesk’s requests for comment for this story.
Questions amid eye-watering prices
To be sure, users say they’ve been able to withdraw certain coins from WEX since the troubles began – but at a very steep cost.
Specifically, tether (USDT), zcash, namecoin and peercoin have been available for withdrawal. But their prices on WEX are extremely high compared to the rest of the market, so buying them just to get money off the platform is an expensive proposition.
Other cryptos also maintain extraordinarily high price tags on WEX, with bitcoin trading at $8,602 (compared to about $6,450) and ether at $319 (versus roughly $204).
At some point, around late July, fiat withdrawals were opened but with commissions ranging as high as 45 percent. Even at that price, some users in WEX online chats said they were considering taking their money out, since the longer they waited, the less they trusted the exchange’s management. But now, even this option is no longer available, users have told CoinDesk.
It was around that time that it became public that the owner and CEO, Dmitrii Vasilev, was going to sell the exchange to Dmitry Khavchenko, a militia fighter in Eastern Ukraine, according to a report by Russian media service RBC. Withdrawals were frozen in the wake of that report, and Vasilev later told CoinDesk he hadn’t been in control of the exchange and that the administrators weren’t communicating with him. The identities of the exchange’s administrators, as well as those who actually custody user funds, has never been openly disclosed.
Khavchenko told CoinDesk last week that the deal was signed and the money passed to the seller. Yet according to the Accounting and Corporate Regulatory Authority of Singapore, where WEX is registered, as of Monday, Vasilev was still listed as the owner.
With traders devastated by the situation, trading volume on WEX, once in the tens of millions, has plunged to less than $1 million daily.
Frozen bitcoin image via Shutterstock