Brazilian Crypto Platform BlueBenx Halts Withdrawals; investors suspect fraud.

Management of the crypto lending platform BlueBenx recently revealed that the company had fallen prey to a ‘very aggressive’ hacking attempt, causing them a loss of more than $32 million. Citing the same, the firm has halted withdrawals of all forms and paused other services, including transfers and deposits. However, users of the platform are far from convinced by this ‘story’ and suspect this announcement to be a cover-up for not being able to deliver the promised returns.

While onboarding the 22,000 users, BlueBenx had promised them returns of up to 66% on their crypto deposits when the crypto markets were running choppy. So the announcement of a cyber-attack coinciding with liquidity troubles does not fit well for the investors. The firm has also laid off a substantial workforce as a second-order effect. This sequence of events rings alarm bells for all investors who claim to have ‘lost their confidence in high yield crypto projects.’

In an interview reported by the Brazilian news board Portal do Bitcoin, one of the customers cited a lack of management transparency and accountability as the reason behind this speculation of fraud. The basis for this claim is the fact that investors were only provided selective information about the scam, and that too through the following email:

“Last week, we suffered an extremely aggressive hack in our liquidity pools on the cryptocurrency network; after incessant attempts at resolution, today we started our security protocol with the immediate suspension of operations of BlueBenx Finance products, including withdrawals, redemptions, deposits, and transfers.”

With more and more scams seeing daylight in the crypto community, the markets are moving towards a high possibility of consolidating systemic risk, inducing a lack of investor trust and confidence in the crypto ecosystem, and posing an undue threat to deserving innovators.