BitForex, the Singapore-based crypto exchange, attempted to bribe Modern Consensus this past week in an effort to get us to remove an old story about them that they didn’t like. We refused.
Crypto exchanges are hotbeds of sketchy behavior. From wash trades to spoofing, from front-running orders to betting against customers, many exchanges operating outside U.S. borders also operate outside ethical bounds. Therefore, chutzpah isn’t just countenanced in the bro-y world of crypto, it’s celebrated as a positive attribute (see Jesse Powell of Kraken as one such example).
About a year ago, we wrote a story about how Seychelles-registered BitForex came out of nowhere with astoundingly high trading volume figures on CoinMarketCap. On August 3, 2018, the exchange showed $4.3 billion-worth of tether trades in 24 hours at a time when 30-day average volume figures were around $2.8 billion. They dominated the BTC/USDT market data on CMC and of course people smelled a rat.
A couple of months later, Bloomberg got around to covering the story, writing that BitForex was doing transaction mining, otherwise known as trade mining. “On BitForex, users earn the equivalent of $1.20 in digital tokens issued by the exchange for every $1 they pay in transaction fees. It’s a system that critics say is tailor-made to encourage wash trading — in which a trader, or a team of traders, buy and sell the same asset repeatedly to inflate market activity.”
Since they weren’t real players in crypto, they sort of fell off our radar. But recently, BitForex has received some more awful press. A week ago, CoinDesk published a story on how Moscow State University student Alexey Andryunin has—for a fee, of course—building bots that conducts large wash trades in order to goose up altcoin’s market volume on minor exchange. That, in turn, makes the token look popular on CoinMarketCap.
Andryunin cited BitForex as one such exchange. CoinDesk published a response from one “Max P.” of BitForex saying, “In a world with an overwhelming number of dubious coins and tokens, a listing fee is standard practice for cryptocurrency exchanges. It goes a long way to determine the seriousness of a partner, ensuring that we are able to bring tokens from projects that are determined to succeed to our users.”
And then sure enough on Saturday morning, our publisher received an email from one Max Preusse, a branding manager at BitForex. The subject was “Ad placement.” [See screenshots at the bottom of this story.]
“I’d like to enquire about your ad placement costs for modernconsensus.com,” Preusse wrote Kevin Sanders, general manager of Sea of Reeds, LLC, the parent company of Modern Consensus. “Please get back to me as soon as possible.”
Sanders saw the emails Monday morning and responded, “What kind of campaign were you thinking about? Display ads or prestitials? Please let me know when we can talk about the specifics on the phone.”
After five back-and-forth emails trying to figure out the logistics of such a call (Preusse is on the other side of the world from Sanders in many respects), Sanders asked again on Thursday morning, “Are you looking to place display ads?”
Three minutes later, he received this response: “In part. I’d like to discuss sponsorship of your site, as well as the removal of certain older articles on your publication regarding the BitForex brand.”
“Wait a second. You want me to take down articles regarding BitForex?” an incredulous Sanders shot back seven minutes after.
Within a couple of minutes, Sanders’ phone rang. It was Preusse calling from a China-based cellphone number. He began by trying to make the call seem like an ad buy but our general manager was having none of it. He had been on too many sales calls over the years to know when someone was trying to pull the wool over his eyes.
Talking a pure ad purchase was fine but Modern Consensus is a news organization, Sanders informed Preusse. If taking down a story was what they were after, they weren’t going to get it no matter how much money they dangled in our faces.
Preusse apologized to Sanders, saying that his boss—whoever that is—insisted he call and bait us with advertising so we would take down the articles. Preusse then said he understood our stance and after Sanders told him that it was a nutty idea, the BitForex employee repeated that it was his boss’ idea. With that, they bade each other adieu and called it a day.
In an interesting post-script, as we typed this very story we received an email from someone said to be named Sally Alexon. They were trying to promote not one but two pieces on how BitForex is “one of the biggest wash trading exchanges in the world.”
A properly managed exchange would never allow employees to bribe publications to take down news stories. In developed financial markets where securities exchanges are monitored and regulated, such behavior could even lead to the perpetrators being led away in handcuffs. But this is crypto, where amateurs and charlatans are adored and called heroes. It’s why BitForex—and plenty of other, larger exchanges—think they can get away with it. Right now, their customers are giving them a pass and governments haven’t yet caught up.
Let’s see if that ever changes.
PS: Here are screenshots of the emails, in case someone wanted proof: