Crypto exchangehas raised $64 million worth of crypto assets in seven days for its own exchange cryptocurrency that won’t be launched on a blockchain for at least six months.
One of the oldest Chinese exchanges,claimed on Monday that over the last week it was heavily oversubscribed with orders totaling $2.99 billion for the so-called Gate Points, which can be used for offsetting trading fees on the platform.
Moreover, each Gate Point further entitles a holder to receive 2.5 Gate Tokens (GT), the native cryptocurrency of Gatechain, the exchange’s yet-to-be-launched proprietary blockchain.says it expects the network to go live in the fourth quarter.
According to a blog post published on April 1, the first phase of the Gate Points sale started on April 8 and lasted for seven days. As Gate’s fees are paid in tether (USDT), the U.S. dollar-pegged stablecoin, one Gate Point is worth 1 USDT in reduced fees. The points were purchasable with bitcoin, tether, ether, EOS, or the tokens of rival exchanges Binance (BNB) or Huobi (HT).
Marie Tatibouet, chief marketing officer of, told CoinDesk in an interview that the exchange distributed 150 million GTs to successful Gate Point subscribers during the first phase, and in return, collected $64 million as prepaid trading fees. (The initial reward ratio of 1 Gate Point for 2.5 GT depreciated by three percent every day during the first phase.)
was founded in 2013 under the name by CEO Lin Han. It suffered a hack in 2015, which resulted in loss of some 7,000 bitcoin from its cold wallets.
Following the Chinese central bank’s ban on initial coin offerings (ICOs) and fiat-to-crypto spot trading in 2017,closed its domain, rebranded to and dropped fiat trading. The exchange shifted its focus to crypto-to-crypto and Chinese yuan over-the-counter (OTC) trading.
Issuing an exchange token with a trading fee point system rather than a conventional ICO is not unprecedented, as Huobi also issued its Huobi Tokens (HT) in a similar fashion in early 2017. Binance, on the other hand, sold its exchange tokens BNB through a traditional ICO while BNB can also be used to offset trading fees.
Butplan comes at a time when exchange tokens are seeing notable growth in the crypto markets partially due to the emergence of initial exchange offerings (IEOs), which have gained traction on major platforms such as Binance and Huobi.
In fact, Tatibouet saidwill announce a plan on Wednesday to launch its own IEO platform, similar to Binance’s LaunchPad.
She further claimed that on April 8, the day the Gate Points sales began, about $155 million worth of tethers were deposited to the platform’s USDT wallets overall.
Weirong Chen, an analyst from Beijing-based blockchain data analytics startup TokenInsight, said the recent price surge of exchange tokens has bolstered retail traders’ enthusiasm for the area.
She told CoinDesk:
“The demand is indeed correlated with the overall market condition, when exchange tokens have jumped by 150 percent in Q1. Thus retail investors’ anticipation for these tokens to yield a high rate of return is still positive.”
Such interest appears to have also caused an influx of USDT tofrom rival exchanges such as OKEx and Huobi. The resulting scarcity of tethers on those exchanges drove up the stablecoin’s price to an average 3 percent premium over par value when Gate’s sale began.
For instance, for 1 USDT, the bid and ask orders among OKEx’s OTC market makers on April 8 centered around 6.95 Chinese yuan, or $1.03, while some even posted ask prices as high as $1.14 per coin.
Yet Chen said multiple reasons led to the price premium for USDT among Chinese traders, including the demand for Gate’s exchange tokens with a high expectation of return, but also bitcoin’s bull run on April 2.
But, despite such seemingly high buying interest, it’s important to note that for the time being GT is at best a tradable sign or liability.
Because unlike Huobi’s HT or Binance’s BNB, which were issued as ERC-20 based tokens on the ethereum network at the time when they were sold, GT is not yet issued on any public blockchain with a verifiable contract address.
Based onannouncement, the exchange plans to issue a total of 1 billion GTs, 50 percent of which would be reserved and locked up for a year for research and development as well as marketing efforts.
Another 300 million would be allocated to users who subscribe to the exchange’s trading points, half of which were distributed last week.
said trading of GT will be enabled at the end of April but deposit and withdrawal won’t be available until the launch of Gatechain.
As such, Tatibouet acknowledged that for the time being, there are no other ways to track and verify the movements of any GTs, including those that are said to be locked up.
“There will be proof on how this is issued, since not every technical detail has been worked out now,” she said.
Meantime,has started the second phase of the Gate Point sales lasting for a week for users who have been on the platform for over a certain period of time. The exchange aims to raise another $23 million in prepaid trading fees this week.
“The trading of GT [for now] will be more like trading credit points that’s entirely closed,” Chen of TokenInsight said, concluding:
“Indeed, investors can’t see how much is really being issued or how much is circulating at the moment – that’s one risk factor.”
Conspiracy theory? ‘Former developer’ claims Cryptopia’s January hack was a cover-up for fraudulent activities
Nothing draws attention to the cryptocurrency space as controversy does. 2019 has been very newsworthy in this regard, with the case of New Zealand-based Cryptopia starting the year off. The cryptocurrency exchange reported a massive hack in January, where over $16 million worth of tokens were stolen.
Now, there is a new twist to the tale after a “former Cryptopia developer” alleged that the hack might have been a product of a lot of fraudulent activities accumulating months before the hack in January 2019.
Twitter user @notsofast, who claims to be a former Cryptopia developer, released an article link that presented the “hostile takeover” of the exchange by Intranel.
Vcdragon, the author of the steemit post, stated that he and “Adam” started work on the exchange way back in January 2014. Adam was working full-time at Intranel as a developer at that time and Vcdragon was working solely on their Cryptopia exchange project.
Adam eventually resigned and Vcdragon said,
“Adam resigned from Intranel, but they said they didn’t want to lose him and wanted to keep an eye on us so they offered a room in their office for rent, which we would pay for by Adam doing sprint code work for Intranel, and when they didn’t have work for them they charged us cash.”
He added that back in 2017, when the exchange started to “exponentially” grow, Intranel’s interest started to increase and both of them [Adam and the developer] contemplated taking Intranel’s help for the business part of the exchange.
“Intranel made us an offer that for 20% of the company they would handle all of the business management and development things like helping with hiring and managing staff, paying tax, lobbying for regulator guidance and all the ‘boring’ business stuff.”
Things started to take a bad turn after that, according to Vcdragon, who alleged that Intranel was hiring staff for themselves and assigning new employees to the Cryptopia Founders at a higher price. When the exchange started to become dependent on new staff members, they were again charged an extra 5% equity.
One thing led to another and Adam resigned, followed by Vcdragon being “replaced in the office” after he had taken an “unpaid” month holiday.
In their absence, the developer alleged that Intranel completed depleting Cryptopia’s resources and carefully made it a part of their own company under ownership.
Vcdragon went on to claim,
“They bled money everywhere they could, we paid for tax on their staff’s flu shots? We paid taxes on Christmas fits to their staff and our company bought the gifts. Everything they were unable to take for themselves they pissed into the wind on needless expenses and luxuries to the company could not afford….that ultimately buried us.”
Vcdragon explained that back in November 2018, the possibility of Cryptopia going bankrupt was extremely high, if Intranel was not removed from the company.
While Vcdragon himself claimed to have no knowledge of the hack in January, he speculated that the hack might have been orchestrated by Intranel to hide everything that was done during their time with the exchange.
“I believe the Hack was orchestrated to bury everything they have done, and was planned to happen before we removed them so that it could tidily explain the state they had gotten the company into. And then rushed after their plan was interrupted when they were forcibly removed from the company.”
It should be noted that the veracity of these claims is yet to be suitably verified.
CFTC’s investigation may be contributing to BitMEX’s outflows dwarfing exchange’s inflows
The cryptocurrency community went haywire after Bloomberg, citing an anonymous source, reported that Arthur Hayes’ BitMEX exchange is under investigation by the CFTC for breaking trading regulations BitMEX was allegedly accused of offering Bitcoin derivatives and future products, without having necessary permission for the same, as well as allowing trading for US-Based clientele.
The report alleged that BitMEX leveraged 100x for Bitcoin trading, exposing traders to high risks, while probably having broken a few anti-money laundering regulations as well. The news spread like wildfire and led to prevailing a sense of fear among traders on the platform. The fear among traders was quite visible from the great imbalance between the inflow and outflow of capital from the exchange.
At press time, the inflow of funds on the exchange was down by 50.65% on the 24 hr chart, with the total amount going into the exchange being $11.48 million. In comparison, the outflow was 6 times greater, surging by 357.34%. The total amount of funds taken out from the platform in the last 24 hrs stood at $84.79 million, at press time.
BitMEX is not registered with CFTC
The sudden spike in outflow was triggered by the Bloomberg report. However, it is important to note that BitMEX is not registered with the CFTC. Instead, its headquarters is located in the Republic of Seychelles.
Previously, the CFTC had asked BitMEX to discontinue its services for US-residing traders, which they had to agree with. But, the report conveyed that the investigation began with the suspicion that BitMEX, despite the requested blocking of services, continued offering its trading services to US traders. While the report itself did not impact the crypto-market, it seriously hampered BitMEX’s reputation and created a sense of fear among traders.
The allegations against the exchange are quite serious and if there is not much clarity on the status of the investigation, the large outflow of funds might continue.
HitBTC under fire after users lash out at exchange’s withdrawal services, exorbitant transaction fees
The cryptocurrency industry has seen multiple incidents where holders and users of digital assets have been negatively impacted due to technical or man-made glitches. Such an incident came to the fore again when multiple customers reported problems while dealing with HitBTC, a popular cryptocurrency exchange.
The problem was highlighted after the exchange was hit by a whirlwind of customer complaints, many of them related to withdrawal and transaction fees. One such customer, Tai Zen, CEO of Cryptocurrency.Market, tweeted,
“I highly recommend staying away from @hitbtc at this time because you never know if you can withdraw your coins from their exchange or not. I do not see any reason why you CAN NOT withdraw popular coins such as @steemit @cosmos @tezos @helloiconworld.”
As a response to Zen’s tweet, HitBTC tweeted,
“We are sorry that you feel this way. Our platform provides hundreds of markets by integrating foreign software for each asset. This software requires regular technical maintenance and sometimes takes longer than expected.”
The exchange’s response was met with tepid reactions from the rest of the community, with many of them calling the exchange ‘diplomatic’ or ‘politician-like’. Another Twitter user, CryptoshiSk, complained,
“The worst thing is that they even do not allow to move coins from main to trading account although this is just internal transfer and has nothing to do with wallet maintenance. Real scam. be careful .”
HitBTC was quick to respond and said,
“Transfers between the main and trading accounts are sometimes affected by the maintenance as well. Can you let us know whether there’s an asset you’re interested in particular? Thanks in advance.”
The list of complaints did not end there as the rest of the customers’ grievances focused mainly on the ‘exorbitant’ transaction fees charged by HitBTC. Presently, HitBTC charges a withdrawal fee of $13.73 for every transaction while Bitstamp, another popular cryptocurrency exchange, offers the service free of cost.
To put things into perspective again, the fee imposed on a single XRP withdrawal on HitBTC costs $2.78 or 6.378 XRP, while at the same time, Bitso, a direct competitor, charges no money for the withdrawals.