While the crypto sector is still recovering from the FTX collapse, crypto influencer 0xSea.eth hinted at Wyre and Changelly’s liquidity crisis in a Twitter thread.
0xSea.eth took to Twitter with claim that Changelly has frozen $3 million in user funds after Wyre also held back a large withdrawal. The core developer questioned the reliability of centralized exchanges and crypto wallets by citing withdrawal issues of a user.
He claimed that user K who tried to swap USDT with USDC on Nov. 11, is unable to withdraw $2,932,345 even after a month.
Is the hardware wallet Ledger reliable?
Due to events such as FTX, many people felt that CEX is no longer safe, so they withdrew their coins and put them on cold wallets. But are cold wallets necessarily safe?
It has been reported before that the funds through the ledger support service provider Swap were lost for no reason. But this is not an isolated case, my friend K has also experienced a similar thing, the amount is as high as 3 million US dollars, and it has not been resolved yet, what happened is as follows.
Due to the problems in FTX and the market’s concern about FUD and USDT in the market, K intends to replace USDT in Ledger with USDC.
Ledger live recommended the Changelly team platform, promising real-time arrival without registration.
K had never heard of the Changelly platform before, but because it was recommended by Ledger, he felt that there should be no problem, so he tried it out with a small amount of exchange, and it quickly succeeded.
Then, he then operates on Changelly to convert USDT equivalent to USDC of USD 2,932,345. After K’s operation was completed, a few hours later, the platform displayed “transaction broadcast successful”, but in fact the funds had not yet arrived, so K contacted customer service.
An unexpected thing happened. He was asked to do KYC, but this was only proposed after he contacted the customer service. Ledger Live did not prompt him during the previous operation.
That is to say, Changelly first received USDT before asking K to open an account and pass KYC. K cooperated to complete all the steps. Then the other party’s security team sent an email requesting the source of funds. K provided a bank statement.
While waiting for review, the platform continued to ask K for details such as address attribution and source of funds. K answered all questions and provided relevant business contracts. Changelly said received and under review.
Another week later, Changelly asked K to provide proof of source of funds and to explain several of the transactions. K originally thought that Changelly might have misunderstood the English date format and thought that the contract was signed after the payment was received.
In this regard, K explained that the contract was signed on June 7, 2021, not July 6. The first payment was made on June 15, after the contract was signed. One of the payments was dated Dec. 7, not July 12.
After K explained the above problems by email, Changelly further asked K to explain the relevant payment corresponding to the contract. K this time noted each transaction, the nature of the transaction, and the payment for the corresponding contract.
As a result, the incident eventually took a desperate step, and Changelly team has never responded since. Another week passed, during which K kept sending emails to try to contact Changelly team, and offered to hold a meeting with the Changelly management team to explain all the problems at once.
If the other party is unwilling to accept, you can also send USDT back to the sending address. However, email inquiries fell silent, and the other party did not reply.
At the same time, K also emailed Ledger twice, and the customer service said it had been forwarded to Changelly and asked K to wait.
Since November 11th, 3 million USD has been withheld for more than a month without reason. Why was this large exchange deliberately delayed by Changelly?
K doubts whether Changelly team still has the ability to pay. After a simple search of the platform, Changelly appears to be a “recidivist”.
The official website has a Trust Pilot customer rating page, in which there are nearly 400 1-star negative ratings. According to feedback from other customers, Changelly has also seized or delayed the payment of other customers’ funds through KYC and other reasons.
On the Trust Pilot page, some customers who lost funds commented and guessed that this is Changelly’s business model, which seizes customer funds for no reason, and then lends them out to earn interest by taking advantage of the time difference.
Through delay or seizure, some funds become sedimented funds, or even Changelly’s team profits.
This large amount of nearly 3 million US dollars, in a turbulent market environment, K worried about the unreliable exchange service provider, so he found Ledger, pgauthier and P3b7, and was recommended by Ledger to its exchange partner Changelly team, But in the end, in the above process, K lost the funds in this way, and has not received a response from the other party so far.
The official Ledger website lists 4 exchange service providers— namely; Changelly team is one of them, and it is also recommended by Ledger Live by default.
A few weeks ago, there was a problem with Wyre exchange, this time it is Changelly, a simple USDT/USDC exchange took so long and has not been answered yet. K’s request is very simple, that is, to return the 3 million funds. At present, K is preparing to call the police in Hong Kong.
However, Ledger Support has requested to wade into the issues but maintain further discussion should be done privately via Twitter Dms.
Editor’s Note: The Changelly team sent us this response and we’re publishing it as received.
I am writing to you on behalf of Changelly.com. We would like to address the issue highlighted in this article written by Paul Ugbede Godwin.KYC checks indeed exist on the Changelly platform but are triggered on a minuscule number of transactions. You can find a more detailed review of our KYC policy here
Even if the procedure is triggered in the first place, there is a very high possibility that the user and/or the funds in question are connected to fraudulent/other illegal activities. Such situations require more thorough investigations.
Regarding the particular case of the user with alias “K”, we are conducting an investigation because we have very strong reasons to suspect the user/funds in question are DIRECTLY related to a major well-known infamous scam that occurred some time ago in the crypto community. (Sadly, for now, we cannot disclose the name of the scam yet.)
We are trying to be as thorough as we can in our investigation, but sadly, it takes time. Once the investigation is concluded, we will take measures according to its outcome, but for now our reasons to suspect the user in some kind of involvement in a major scam of the past are almost concrete. There already were a few cases where Changelly helped to identify and return stolen funds to their rightful owners (Case of Bithumb for example). Similar outcome would be great to the community in general if the suspicions were proven to be true, which we think they might be.
As for the negative reviews that you highlight in the article, we do not understand that point completely and consider it to be nothing but confirmation bias. We have ±2800 reviews on Trustpilot, and 75% of those are 5 stars. Sadly, you didn’t mention that at all. Yes, we do have a number of dated negative reviews on our platform. The absolute majority of these cases have been successfully resolved. We really understand the concerns of the community in light of recent events in crypto markets, but the situation here is nothing like the headlines of the few recent months. We all know that sadly there is some money of criminal origin circulating in the market, and we believe that any business which intends to stay on the market should do its part to restrict such circulation when they can.
But we kindly ask you not to jump to conclusions so swiftly, it seems a little bit like FUD to us. Some influencers and media outlets made content on the story without trying to understand the situation fully, not to mention without trying to contact us to hear our side of the story, and we don’t think this is completely fair. And this particular letter serves as clarification from Changelly.
We have no intention of freezing users’ funds forever and, what’s more, have no intention of taking and using them.
Hope we were able to clarify the issue and transfer our thoughts clearly. Thank you, and be sure to email us, if you have any questions.
