October 7, 2014 10:27 PM

Canadian Bitcoin Exchange CaVirtex Still Not Allowing BTC Withdrawals

CaVirtex, one of the oldest and largest Canadian Bitcoin exchanges, disabled Bitcoin withdrawals yesterday. CaVirtex informed their twitter followers of the inconvenience via tweet. Litecoin withdrawals are still allowed, which leads some to believe that CaVirtex hasn’t run with funds and is just experiencing a delay. CaVirtex did not give any specific timeline for when Bitcoin withdrawals would be re-enable, though they did give a reason: Hot wallet top off.

Also read: Canada’s Largest Bitcoin Exchange Now Accepts Litecoin

An Empty Hot Wallet

Many community members and users of CaVirtex are increasingly suspicious of the long hiatus in full functionality. CaVirtex did not halt trading BTC trading, or put any sort of notice on their actual website about the freeze on Bitcoin withdrawals. As a result, people have been buying Bitcoin on CaVirtex and then realizing that they are not able to be withdrawn. Unfortunately for CaVirtex even if this is merely a routine cold storage to hot wallet transfer that is taking more than 6 confirmations, the comparisons to Mt. Gox have been made. Even more damning for CaVirtex is the fact that they did not announce the lack of available BTC until asked point-blank about it on Twitter.

CaVirtex has been a Canadian Bitcoin brand for years now. In fact, CaVirtex was one of the only Bitcoin exchanges to do an IPO on a centralized “Bitcoin securities” platform: Havelock Investments. Later, CaVirtex delisted and changed all shares to non-transferable certificates.

Community Demands Proof of Solvency from CaVirtex

Most Bitcoin companies utilize a cold/hot wallet setup to ensure that even if breached, the company would only lose a small percentage of the BTC held. However, even if the cold storage private keys are held offline in a bank vault, the turnaround for refilling a hot wallet should never take over 24 hours. Some in the community are now asking for CaVirtex to pass a Proof of Solvency/Proof of Reserves audit, like BitFinex, OKCoin, BitStamp, and others have already undertaken. Unfortunately, even a full BTC/LTC Proof of Solvency would not prove CaVirtex’s solvency as a whole since they also have Fiat liabilities; however, it would be a good step forward.


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Caleb Chen @bitxbitxbitcoin

Caleb is a graduate of the University of Virginia where he studied Economics, East Asian Studies, and Mathematics. He is currently pursuing his MSc in Digital Currency at the University of Nicosia.