Have BTER been bad?

Thursday 31 March 2016

Lisk’s recent blockbuster ICO has prompted questions about the conduct of one altcoin exchange.

Crypto exchange BTER is no stranger to controversy. Back in August 2014 a hacker who called himself TheSir stole 51 million NXT from their hot wallet, at the time worth around $1.7 million - something that would never have happened if the most basic of security precautions had been observed. That money was returned after payment of a ransom of 400 BTC, a more liquid and desirable currency for the hacker.

In January 2015 they were implicated in a ‘pump and dump’ coin ICO, with chat logs allegedly showing they had colluded to inflate the price artificially before a timely and profitable exit for the pumpers.

Bad dog

Alright, what have you been up to this time?

The next month, 7,170 BTC were stolen from BTER, again worth $1.7 million. This time, no funds were returned. Instead of folding, BTER said they would pay back customers from their profits over a period of time. (Quite a long period of time, since the sum was so colossal.)

Now, there are accusations of further shady dealings during the recent LISK ICO, which raised almost $7 million in bitcoin and Crypti.

The short version of the accusations goes: BTER froze Crypti withdrawals so that customers couldn’t invest them in the LISK ICO. Then at the last moment, they stole and invested the funds themselves, without permission.

BTER’s CEO Lin Han responded in a somewhat hurt tone. You can read their full statement here: but the gist is: ‘We couldn’t sync the wallet. We tried everything we could but we got no help from the Crypti team. We knew there wouldn’t be time for people to invest, so we added up all the withdrawal requests and invested them for you using funds from our hot wallet and the Crypti escrow account for the ICO. Everyone’s happy.’

The Crypti guys responded by suggesting a slightly different picture - not least that had BTER started their requests at any time in the preceding month, and not with hours to spare, they might have had more success. The Skype screenshot is rather misleading, they add, and post the full version. 

And the LISK team themselves

During the last 3 hours of the Lisk ICO the admin and owner of Bter (called Lin) transacted 2.5M XCR from the exchange’s hot wallet into our 2nd Crypti escrow account.
Bter didn’t announce their plans in a public statement in advance. Therefore, we have to conclude that the legitimate XCR holders on Bter didn’t know about this plan, and Bter didn’t have the authorisation for this transaction.
After taking legal advice we came to the conclusion that it would be completely unethical, and potentially illegal for us to accept Bter’s transaction of 2.5M XCR. The funds will be refunded back to Bter in full, where it is hoped, with the co-operation of Bter, customer’s will be able to withdraw their XCR into their own accounts on the Crypti network.

Outright criminality? Perhaps not. Unprofessional? Well, come on. This is crypto, people.

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