Cryptocurrency exchange WEX continues to see prices well out of step with the broader market amid a near-total freeze on customer withdrawals.
As CoinDesk reported, customers of WEX – a kind of successor to the now-defunct cryptocurrency exchange BTC-e – have been on tenterhooks since July 12, as they’ve largely been unable to get outbound payments processed.
The only exceptions have been for the crypto assets tether and zcash (along with lower-volume, lesser-known alternatives like namecoin and novacoin) and the price disparities suggest that some WEX users are utilizing these tokens as a way out. The normally dollar-tied tether, also known as USDT, is currently above $2 and WEX’s price for zcash (against the US dollar) is $440, or more than double the prevailing rate on the broader market.
Those looking to convert their money held on WEX to zcash or tether just to get it out of the exchange must pay a steep price, according to one customer.
“If you buy zcash on WEX, you will have to sell it somewhere else much cheaper, losing up to 50 percent, as the USDT rate is now $2.195 on WEX,” Grigory, a systems administrator from a town in Russia called Ivanovo, told CoinDesk. Further, the ability to make withdrawals has become unavailable again from time to time, he added.
In the absence of word from WEX staff, users have taken to social media and the exchange’s chat box to wonder aloud about the story behind the delay.
Cryptocurrency prices have risen on the site as well, with the value of bitcoin exceeding $9,600 as of press time, or more than $1,400 above the price recorded on CoinDesk’s Bitcoin Price Index (BPI). Prior to the withdrawal issues, prices on the exchange had notably spiked above $9,000.
WEX representatives have not responded to multiple requests for comment.
The situation on WEX has been brewing for more than a week, the exchange’s own statements show.
On July 12, WEX announced on Twitter that withdrawals of fiat and cryptocurrencies were blocked due to the “database migration and other maintenance.”
Later that day, it was said that maintenance had been completed, and some coins, including zcash and tether (as well as lower-volume coins like namecoin and peercoin), were available for withdrawal. But larger crypto assets like bitcoin, bitcoin cash, ether, litecoin and dash were to remain unavailable until July 22, according to a post on July 16.
The last public message via Twitter was posted on July 19, saying, “Maintenance has finished successfully.”
However, when July 23 came, exchange customers kept complaining that withdrawals were still blocked.
“No Withdraw is working. It is 23rd now. Maintenance fail can happen, but no information is worst. After BTCe now WEX?” said user @Pete11240362.
“Administrators, if you can’t resolve the problem right now, say: maintenance works in process. Get smart, give some feedback,” demanded Russian-speaking user Sergey Ionkin, who goes by the handle @dear_enman.
Some of the affected users took to Telegram to discuss the situation. One of the groups was promoted and possibly created by Dmitry Vassiliev, an official owner and CEO of WEX, who previously told CoinDesk that he lost control over the exchange due to the intervention of some people he declined to identify.
On Monday, a user in one of the channels claiming he is Dmitry Vassiliev – using two similar usernames, (Dmitry Vasiliev and Dmitry wex.nz) – wrote that he had agreed to register the exchange in the name of the new beneficiaries who are already de facto managing WEX.
The user claimed that the deal is going to take place on Thursday, and promised to reveal the names of those beneficiaries if they don’t fix the situation on that day. Vassiliev stopped answering CoinDesk’s inquiries after a brief exchange on July 12.
No easy ways out
According to Grigori, avenues for actually taking money off the exchange exist – but at a price.
Grigory told CoinDesk he has had 0.1 BTC waiting in limbo on WEX since July 12. He said he started using WEX in the end of 2017 because he liked that the exchange didn’t require ID verification.
For the most of time everything had worked fine, he explained: he had been able to withdraw coins within an hour or less, and fiat-denominated funds would appear in his e-payment account in several hours after the withdrawal transaction.
But that changed earlier this month, he told CoinDesk. The tech support on WEX has provided no reasonable explanation and only recommended waiting until the maintenance is over, Grigory contended.
Fiat withdrawals were ceased in that period, too, though the ability to withdraw funds via so-called WEX codes remained for a time. Users would generate a special code with their accounts and then exchange those codes for fiat currency on specialized websites, which would sent a corresponding amount of dollars or rubles to users’ accounts at Russian payment services like Yandex.Money or Qiwi.
But this is no longer a viable solution, according to Grigory.
“At some point, the offers to buy WEX codes disappeared from those exchange websites as there were enormous numbers of people who wanted to sell them,” he told CoinDesk, adding:
“Now people who wanted to quit at any price have already quit, but the exchange rate is still bad.”