Iranian digital currency exchange Bitisis has collapsed, prompting an investigation from police in China. The exchange, which is reported to have ownership links to China, is the latest international exchange to fold in recent months, with a number of similar failures thought to be linked to the same individuals.
In the case of Bitisis, the exchange claimed to be able to carry arbitrage in a bid to appeal to investors, before collapsing—taking investors’ capital with it.
Law enforcement authorities in China have opened an investigation into the matter after the exchange transferred user assets to three separate crypto addresses, local media reported. The addresses have since been frozen.
According to local press, Bitisis was effectively a Ponzi scheme, enticing investors to convert BTC into that platform’s own IRRT token. With deposits attracting a so-called “high premium,” users were then able to convert to USDT, subject to various thresholds and withdrawal processes.
The exchange was found to use aggressive sales and marketing tactics to win over unsuspecting investors, including online tactics across Chinese social media designed to falsify SERPs and the available information about the company.
Investors alerted staff at a major digital currency exchange of how Bitisis was operating, leading to the relevant addresses being frozen before funds could be taken from the scam.
Links to China were first established when investors uncovered use of an Alibaba cloud server when analyzing the exchange. Furthermore, with the exchange promoted exclusively in Chinese social media online, the scam is widely expected to be controlled from China.
The exchange is also linked to several other known scams, using similar marketing methods and scheme structures to defraud investors.
According to reports, the scammers themselves failed to put in place effectively technical measures to remove the funds, with their technical naivety responsible for their digital currency accounts being frozen before the scammers could make off with the funds.