Is Bitbns Crypto Exchange the Next FTX in Making?

Serum's crypto token was one of the victims of FTX collapse's fallout
Is Bitbns Crypto Exchange the Next FTX in Making?

NEW DELHI (CoinChapter.com) — In the wake of FTX’s collapse, several Indian cryptocurrency exchanges have vowed to be more transparent about their reserves to maintain investor confidence. Yet, Bitbns, an Indian crypto exchange that has been in the negative limelight over the past few months, is missing from the conversation.

FTX collapse throws spotlight on crypto exchanges

The domino effect of FTX’s downfall, once the world’s third-largest crypto exchange by volume, has sent shockwaves across the industry. The lack of appropriate reserves pointed toward major cracks in the stability of crypto exchanges, even ones that were thought to be infallible.

Simultaneously, Bitcoin’s steady drop from a record peak of $65K to $20K erased a large chunk of the total crypto market cap. The price of top coins such as Ethereum, Binance Coin, Cardano, and MATIC has declined along with the king coin, with each shedding over 50% since year-to-date.

Bitbns, Is Bitbns Crypto Exchange the Next FTX in Making?
Bitcoin Daily Price Chart, Source: TradingView

Meanwhile, It was estimated that 1 Million Indian crypto investors were affected by market fluctuations and were finding ways to exit the market and cut losses. The reaction prompted a response by several Indian cryptocurrency exchanges to retain flocking customers.

Prominent Indian crypto exchange CoinDCX published its proof of reserves on November 24 while CoinSwitch recently confirmed that its crypto and fiat currency holdings exceeded the total amount held on behalf of its customers.

However, Bitbns, a popular Indian exchange catering to over a Million customers, remained pat on their proof-of-reserves.

Bitbns’ silence concerning

Source: Twitter

Many social media began to grow increasingly frustrated by Bitbns’ lack of commitment on the same. What’s more concerning is that Bitbns was hit by certain restrictions in August 2022, forcing the exchange to halt fiat withdrawals on the platform. Several reports emerged that the accounts were frozen following a probe by the Enforcement Directorate into crypto and fintech startups.

Source: Twitter

Although the exchange’s Twitter handle clarified that fiat withdrawals requests were being done in batches during the time, many users continued to experience problems in succeeding months as well.

Source: Twitter

@Krishna45352515 indicated that their money has not been credited despite withdrawals made on November 7.

Source: Twitter

Another used said that their withdrawal was initiated 2 months ago but the same had not ‘been released’ in their respective bank account.

Source: Twitter

What is proof-of-reserves?

‘Proof of reserve’ is an auditing procedure that requires third-party auditors to verify an exchange’s reserve balance. The idea is that the same would help customers judge whether it has adequate funds to match customer deposits.

Meanwhile, the closest Bitbns has come to addressing the issue of its reserves was during a live Twitter session hosted by MoneyControl.

CEO Gaurav Dahake said:

“The Big 4 don’t audit cryptos. Also as it’s a closed ecosystem for the exchanges, it is difficult to verify that. We are trying to figure out a protocol wherein we can cryptographically proof the customer assets and liabilities rather than trusting an auditor who too has different sorts of issues.”

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Bitbns, Is Bitbns Crypto Exchange the Next FTX in Making?

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