Bit4You suspended operations on April 26 amid CoinLoan insolvency investigation by Estonian regulators.
Belgian cryptocurrency trading platform Bit4You has suspended all operations, including withdrawals, amid an insolvency investigation of one of its key partners.
Suite à cela, nous avons immédiatement entamé plusieurs démarches pour comprendre la nature et la portée de cette situation.— Bit4you (@Bit4you1) April 26, 2023
En savoir plus - https://t.co/wg7iHqN9jt
The company explained the freeze in a blog post, claiming it was a necessary action to protect platform users and citing regulation against CoinLoan, a partnering cryptocurrency loan service based in Estonia:
“We would like to inform you that we recently learned that one of our major service providers, Estonia-based CoinLoan, no longer had the required registration as a custodian of virtual currencies.”
Estonian regulatory authorities issued a stop order on April 24 prohibiting CoinLoan from processing or releasing assets without the expressed consent of an appointed “temporary insolvency practitioner.” This prohibits the platform from moving, releasing, or disposing of assets, or otherwise processing transactions without such permission.
Bit4You claims, as of April 26, that it has “no indication that virtual currencies held on behalf of our customers with CoinLoan will not be recoverable.”
A blog post from CoinLoan, cited by the Bit4You team in their announcement, states that the company believes it has the capability to meet its obligations:
“Our legal team has provided enough arguments to prove CoinLoan's ability to fulfill its obligations. The appointment of a provisional administrator seems to be the simplest way for the court to find a solution by allowing an independent third party to verify the financial situation of the company.”
The post also mentions that the Estonian court’s action was “unexpected” and would have an immediate effect.
Among the current list of Bit4You user and company assets locked up in the Coinloan suspension order is more than 145 Bitcoin (BTC) worth in excess of $4 million at the time of this article’s publication. Per the company’s blog post, this represents more than 81% of the organization’s total BTC assets.
Also frozen are 638,630 Cardano (ADA), 1,247,519 XRP (XRP), 1,097 Ether (ETH), and numerous other tokens.
CoinLoan has signaled its intent to appeal the decision but maintains that it must currently comply with the Estonian court’s cessation order.