Belgium-based cryptocurrency trading platform Bit4You has announced that it has suspended all of its operations, including withdrawals, after one of its key partners, CoinLoan, was hit with an insolvency investigation by Estonian regulators. Bit4You claimed that it was taking the necessary measures to protect its platform users and cited regulations against CoinLoan as the reason for its freeze.
According to a blog post by Bit4You, the Estonian regulatory authorities issued a stop order on April 24, which prohibited CoinLoan from processing or releasing assets without the expressed consent of an appointed “temporary insolvency practitioner.” This essentially barred the platform from moving, releasing, or disposing of assets or otherwise processing transactions without such permission.
Bit4You, which partnered with CoinLoan to offer cryptocurrency loan services to its users, said it had no indication that virtual currencies held on behalf of its customers with CoinLoan would not be recoverable. However, 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.
In addition to BTC, other cryptocurrencies that are currently frozen include 638,630 Cardano (ADA), 1,247,519 XRP, 1,097 Ether (ETH), and numerous other tokens. Bit4You has yet to reveal when it will resume its operations.
CoinLoan, on the other hand, has signaled its intent to appeal the decision but maintains that it must currently comply with the Estonian court’s cessation order. A blog post from CoinLoan cited by the Bit4You team in its announcement states that the company believes it has the capability to meet its obligations. The post also mentions that the Estonian court’s action was “unexpected” and would have an immediate effect.
The Bit4You-CoinLoan partnership allowed Bit4You to offer its users the ability to use their cryptocurrency holdings as collateral to borrow other cryptocurrencies or fiat currency. This partnership was expected to be mutually beneficial, with Bit4You benefiting from CoinLoan’s loan platform, and CoinLoan gaining exposure to a larger audience through Bit4You’s customer base.
This news comes as a blow to Bit4You’s customers, who are now unable to withdraw their cryptocurrency holdings. It remains to be seen how this situation will unfold, but it is clear that Bit4You and its users will be impacted by the insolvency investigation of CoinLoan.
This incident underscores the importance of due diligence when choosing cryptocurrency partners, and the need for regulatory compliance in the cryptocurrency industry. As cryptocurrency continues to gain mainstream adoption, it is crucial for all stakeholders to adhere to regulations to ensure the protection of users and their assets.
