How Hotbit (a Centralized Exchange) is systematically Stealing tokens from small community projects
I write this article with a heavy heart, and before we get into details, I wanted to give a short introduction for people not familiar with the SHIBA community. Back in August of 2020, we launched $SHIB as a fair token, locking the liquidity and burning the keys to lord Vitalik (Woof!) You can read up on our history here
Fast forward to degen Feburary 2021 with Doge dominance rising, ppl discovered SHIB and in a few days had over 50m USD in trading volume on Uniswap.
What happened next was a little expected, because having been in the defi space for a moment, we have seen it before. After the volume came. . there was a flood of new accounts joining our Telegram with names like “John James” or “Mary Patrick” and all to the T, were asking “is this listing on hotbit” “can I trade this on hotbit” and then some other “David Smith” would answer “yes I hope so, maybe soon”
So obviously Hotbit controls a Low-iq shill army and sends them to telegrams, twitter and reddits to make incessant chatter. My mod team counted up that they banned over 200 accounts doing this low-iq hotbit chatter. Their goal is obvious and it works to some extent if it is not actively defended against.
Now while I do understand that “sometimes, CEX is good” in this case, I have seen the same story with Hotbit and other of these small exchanges run the same playbook.
How Hotbit steals from users
This is how they do it, and it involves a term called “fractional reserve selling” for those from the finance industry.
More or less their house market maker lists SHIB tokens for sale on their order book that they don’t actually own and they will sell into the market (suppressing the price with their excess supply) 2, 3, 5, 10 x of the tokens actually deposited. This not only causes the suppression of the overall project price but sets up a ponzi where Hotbit can never actually cover all of the SHIB token that users see in their wallets. The only way users will ever be able to withdraw all their SHIB is
1- If new pleb deposits SHIB and they take that and use it to cover withdraw request. PONZI!
2- They “freeze withdraw” until the price of SHIB dumps down (often due to Hotbit suppression) and then they buy it up low in order to cover withdrawls
or…
What we are doing now which is taking and stand and exposing their criminal activities.
XOR and MXC History
I know exactly how this works because I was a member of the XOR community last year and we had the exact same problem with MXC.
What happened with XOR was that it was already listed on MXC and the price went crazy. . from a few pennies to $50,$100++ and MXC was doing the same fractional reserve selling. (selling XOR they didn’t own)
It was said that they sold over 1m USD of XOR that they didn’t actually own and basically got caught and were waiting for the price of XOR to dump so they could buy back. So for months MXC just gave blah blah excuses. They are a China exchange so there is no jurisdiction that can hurt them
So what happened is a bunch of XOR holders got together and hurt MXC the only way they cared, they petitioned CoinGecko and CoinMarketCap to delist MXC from their platforms until this was resolved. Bobby (CEO of Coingecko), being the peoples hero did this and BOOM. Within a few days of this, MXC sucked it up and bought up the market and made it right.
(however it should be said that the price was lower there then when this all started, so everybody was low key rekt)
The point being is these exchanges do what they want, they don’t give a shits about us users and the only way to get them to change is effect their bottom line (coin gecko delisting is instant death for an exchange btw.. )
Now what to do about SHIB!
Well, this story is about Hotbit and SHIB and I only give the MXC/XOR story so we know the background, but it is the same story.
It is clear that this is Hotbits business model to steal and freeze tokens, so trying to argue with them logically won’t work. They will just gaslight or deflect. The only way to get them to take action and suck it up and admit their theft is to hit them where it hurts, their reputation and their listing on CoinGecko and Coin Market Cap. I don’t know the exact plan, but this is a good starting point for a community group to form.
Remember, this sort of thing happens often, but crypto is so spread out, it is not often that victims realize that they are not the only one.
Important links
SHIBA Telegram — https://t.me/shibainuthedogecoinkiller
Ryoshi Twitter — https://twitter.com/RyoshiResearch
