Multiple Biconomy Users Accuse Crypto Exchange Of Not Allowing Full Withdrawal Of Their Funds

(Updated at 11:56 p.m. ET with Biconomy's comments added in the 25th paragraph.)

It advertised itself as "the safest platform to exchange cryptocurrency and build a digital portfolio." In a market full of scams, rug-pulls and spectacular collapses, it was this bold statement by Biconomy that lured in investors hoping to replicate the success stories of the crypto rich and become millionaires and billionaires on the quick.

But now some investors who have used the platform are reporting troubling experiences with the exchange online. Their complaints come amid a wave of crashes in the crypto space that has damaged investor confidence and destroyed the savings of many.

A Canada-based cryptocurrency exchange, Biconomy surged to popularity in just over three years with some impressive figures since it was founded on Oct. 11, 2017: more than $12 billion traded quarterly, over 350,000 registered users, and availability in more than 100 countries. But now a series of complaints and negative reviews from multiple users paint a troubling picture, one that has become all too familiar in the crypto space as bears stomp all over and watchdogs worldwide conduct endless debates on crypto policy but little else by way of regulation.

On July 12, Biconomy launched the "$BONE Listing Celebration" to commemorate the listing of the Shiba Inu governance token BONE on its exchange. Following the listing, Biconomy traded 77.76% of the total BONE volume and became the top exchange for BONE daily trading volume in the world. In just 24 hours, the platform traded around $6,103,440, or approximately $6.1 million, worth of BONE.

Twitter user @MaximousDarwin was among those who took notice and bought the governance token on the platform. He is a member of the Shiba Army, the loyal followers known for their vociferous support on social media for the dog-themed meme token and their eternal optimism that its price will spike one day and make them all rich. MaximousDarwin's real name is not being published on his request. He told International Business Times that his passion and belief in Shiba Inu and its ecosystem had prompted him to buy more BONE. And he chose Biconomy because of the recent listing and the "good volume" the platform was racking up for BONE.

MaximousDarwin created an account on the platform on July 12 and after that, transferred all of his BONE tokens from his Metamask wallet and from his MEXC account.

"All went well for a few days," he told IBT. "The platform seemed legit; it had good volume and I was able to make some good trades, I even 'won' around 300 BONE on a trade."

On July 20, he faced his first problem. Biconomy, he said, "had problems with BONE" and trading was not possible at the time. He said there were no advisories or notices on the site that withdrawals were frozen.

At first, MaximousDarwin thought it was a temporary glitch, something that is all too common on cryptocurrency exchanges. But he said he investigated a little more about the platform and saw some troubling signs. After some digging online, he suspects that other customers may have experienced the same issues and "rushed" to withdraw his funds from Biconomy.

That is where things went off the rails. "I couldn't withdraw because I always got an error saying the amount was too high," he said. "So I tried smaller and smaller amounts. And I successfully submitted it all, divided into 10 requests of 700 BONE each."

The platform accepted seven of his 10 withdrawal requests but the multiple requests meant he had to pay a higher cost overall to withdraw his BONE. He only received 680.5 BONE against each of his withdrawal requests, as the cost of each transaction on the platform was 19.5 BONE. Maximous alleged that Biconomy "forced a lower amount" for withdrawals because it charges a higher fee for smaller amounts. And the money was refunded after a delay.

Three of his withdrawal requests were canceled. Worried about his funds, he said he tried withdrawal requests for various amounts, and even sold some of his BONE for USDT to test if Biconomy allowed USDT withdrawals, all in vain.

"I contacted them in all possible ways, I created many support tickets and never got any reply on any of those," he said. Maximous said he tried reaching out on the platform's Telegram account but was "told to wait" without being offered any reason.

By now, Maximous was panicking. He turned to the Shiba Inu community for help and shared his experience in the Shiba Inu official Discord and on Twitter on Friday night. GossipShib, a former Shiba Inu growth member and influencer, tagged Biconomy's Twitter account about Maximous' complaint.

"As soon as the Twitter posts started to get some attention, the official Biconomy Twitter account contacted me directly," he said. IBT has viewed screenshots of that conversation conducted via Twitter direct messaging. Biconomy promised to resolve the issue by Saturday, but the "withdrawal requests were canceled or failed for some reason. So I re-submitted them," Maximous said.

He then found out that the funds he received against each request were less than what he should have gotten. He said the platform deducted 185 BONE and 54.97 USDT.

Biconomy's explanation was interesting -- and did not make sense for Maximous.

"Your problem has been solved and you can withdraw the body of the original deposit," Biconomy told him via Twitter. "The technical service reported that your account was arbitrated illegally against the rules of trading on our exchange, so the withdrawal was frozen. You probably know where you are wrong, Now you can freely withdraw the body of the deposit."

Biconomy also asked Maximous to "delete all negative comments as well as those comments created by other people because of your negativity." It added, "You are wrong in this situation and violated the rules of the exchange."

Biconomy also warned: "After the withdrawal, your account will be frozen and you will not be able to use it because you grossly violated our rules." Maximous could access his Biconomy account at the time this article was written.

That was not all. Biconomy told him: "You are allowed to withdraw the body of the deposit. All profits were obtained illegally due to arbitrage and you know it."

Maximous posted screenshots of part of that conversation with Biconomy on his Twitter timeline.

Investopedia defines arbitrage as "the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset's listed price. It exploits short-lived variations in the price of identical or similar financial instruments in different markets or in different forms."

Maximous said he did not engage in arbitrage and only wanted to withdraw his funds, something he was unable to do because the platform would not allow it.

Biconomy doubled down on the explanation it had given to Maximous in comments emailed to IBT on Tuesday afternoon. "We may freeze accounts that engage in fraudulent activities and benefit from exchange and coin trading vulnerabilities — this is illegal arbitrage, liquidity games, and more," Biconomy's business development team said. "According to our trading rules, we allow such users to withdraw the body of the initial deposit — we do not return all illegal profits ... Such rules of operation exist on many top crypto exchanges, including Binance, where users (sic) can freeze their accounts and freeze all funds completely, without a refund and explanation."

After using Biconomy, Maximous now had only 5,684.24 of the 6,5111.01 BONE he owned — 462.77 less BONE, or a loss of around $223.74. That may seem a small amount in the crypto space but if, for instance, all registered users in Biconomy lost that much, it would amount to more than $78 million. Also, considering that many crypto investors are millennials who are pumping their savings into the market in the hope of striking it rich quickly, the impact of such practices by crypto players is more damaging than apparent and will continue to ripple through personal finance budgets for a long time to come.

More victims surface online

The recent crypto crash has weakened the foundations of several crypto businesses, which largely operate in a regulatory vacuum. In June, major U.S. cryptocurrency lending company Celsius Network froze withdrawals and then filed for bankruptcy earlier this month. Crypto hedge fund Three Arrows Capital filed for liquidation late last month. Popular stablecoin project TerraUST imploded in May.

The great crypto collapse and the many scams that have come to light have left many investors high and dry.

IBT's search for other possible Biconomy victims online threw up more Twitter users who accused the platform of scamming its investors. A Twitter user who uses the handle @e_f_i_o_p had an experience similar to that of Maximous.

"They cancel all orders," he told IBT. Only 90% of the deposit is (allowed to be) withdrawn. The remaining 10% they stole for themselves. And this is at best. In the worst case, they output nothing. Support is ignoring requests. Blocked in Telegram chat."

"The day I could not withdraw, refusals came even though I passed the document check. After a long appeal to support via Telegram, I began to withdraw in parts," the investor said.

He said he tried writing to the crypto exchange many times, but they did not reply.

He alleged: "It is impossible to make money on this exchange. They cancel all profitable trades," adding, "I think I was very lucky that I was able to withdraw almost all of my funds from there."

Another Twitter user who goes by the handle @Kozen shared a similar experience. Like Maximous, he was looking for a platform that sells BONE and had a high trading volume. He too was not able to withdraw his money and after making his issue public on the Shiba Inu official Discord, Biconomy reached out to him and — like in the two other instances mentioned above — he was told that he "will only be able to withdraw" his "initial deposit" but not the profit he made on the platform.

He says he was blocked after repeated follow-ups and posts on Biconomy's Twitter and Telegram accounts. Kozen believes there could be many others who have had similar experiences.

Before all this happened, the Ontario Securities Commission (OSC) issued a warning on March 29 naming several cryptocurrency exchanges that had not registered with the regulatory body. Biconomy was one of them.

"We issue investor warnings and alerts about possible harmful or illegal activity in progress, and maintain a warning list of companies or individuals performing activities that may pose a risk to investors," OSC said in the advisory.

In response to an email from IBT, OSC pointed to a modified advisory it published on June 1, which named companies from the March 29 list that had been given "exemptive relief." Biconomy is not on the modified advisory, meaning the OSC's warning about it still stands.