A lot of big news for 3Commas traders from August, but let’s start with the big two: Coinbase Advanced and Bitget. 


Two new exchanges with two unique value propositions

Bitget brings its own strengths to inspire confidence in new users. They keep 1:1 reserve ratio of customer funds as Proof of Reserves, and keep most digital assets in offline cold storage, along wit a 300M USDT protection fund as a backup. 3Commas traders can utilize SmartTrade, DCA bots (single pair only), and Grid Bots on Bitget. 

Try out Coinbase Advanced or Bitget today. 

Turn your trading skills into a cash prize on OKX with individual prizes up to 2000 USDT!

I started back in August, but there’s still time to make it onto the leader board! The top 30 OKX traders, both new and existing, who use 3Commas tools to trade the most during the campaign period will be handsomely rewarded! Here's what's up for grabs:

The excitement begins on August 28th, 2023 and runs through September 28th, 2023. 

ATTENTION!!!  You must sign up using our dedicated OKX/3Commas contest landing page: https://www.okx.com/landingpage/3commas?channelId=ENDOFSUMMER

Two ways to get rewarded when you refer friends, family, or fellows


1) Spice up your profits with referral income

Hey, got a friend, family member, or coworker who seems cool and wants to start trading with amazing crypto bots? 

Get them to sign up to 3Commas using your referral link and we’ll give you 25% of their subscription fees. 

It’s a much better deal than sending you a free t-shirt. 

Grab your link and share it with people who are looking for financial freedom. 

For full terms and conditions of the referral program, please read our Help Center article. 

2) Automatically get new referrals by sharing your favorite bots

Share your expertly crafted cryptocurrency bots with friends and earn rewards! What's new? You can now share your DCA, GRID bots, and Smart Trades with friends outside 3Commas. When they join via your referral link, you become their guide to trading success!

Amplify Your Success: Share insights for greater trading success

Smooth Onboarding: Help friends start trading confidently

Referral Rewards: Earn rewards as they join 3Commas

Build a Trading Tribe: Grow together, strategize, expand networks

Empower Through Sharing: Shape their financial future!

Ready to make a difference while earning rewards? Share, succeed, and shape trading with 3Commas.

Rethink your DCA bots. Our latest blog article delves into the world of Classic Trading, Super Power, Super Speed, and Price Improvement strategies – each designed to cater to different market conditions and exchange types.

Master the art of trading with insights into maximizing profits and minimizing risks! Whether you're a seasoned trader or just starting, this article is a must-read!

Read article. 

Grid Bots are now more capable and more accessible

Now you can launch a Grid Bot with just $100!

We’ve made crypto trading more accessible to users who want to run more Grid bots, more experiments, or simply have a budget. 

In addition to lowering the minimum trading balance to $100, we’ve also updated our default strategy settings and descriptions.


Rising

To initiate the bot, we employ more buy orders than sell orders. By positioning the High price closer to the current market value, trading can begin with a smaller base currency amount, thereby reducing the risk of significant declines if there’s a sudden price drop. This strategy incorporates the Trailing Up function, enabling the bot to continue trading if the price breaks out beyond the initial grid. 

The minimum Rising strategy requirements are as follows:

If the available balance on the chosen pair allows for more lines, the bot creation form will automatically increase their quantity, primarily for buy orders.

The minimum strategy requirements consist of:

If the available balance on the chosen trading pair allows for more lines, the bot creation form will automatically add them.

Previously, the optimizer could fine-tune any settings but it is now only available for bots with 50 or more lines. This is a positive change because it’s far more precise now. 

Check out the new changes and launch a fresh Grid Bot! https://app.3commas.io/grid_bots

We’ve removed Smart Bot, HODL Bot, and Options Bot

We’ve said farewell to HODL Bot, Options Bot, and Smart Bot at 3Commas. 

Our commitment to providing you with the best tools is stronger than ever. That's why we're focusing on enhancing our core products to empower our trading community with the tools they need for their preferred strategies. As you can see from the DCA and Grid Bot improvements listed above, we’re already delivering on this initiative. 

Are you interested in creating your own HODL bot and launching it on your preferred exchange? With the 3Commas DCA bot and TradingView Custom Signal, you can turn this idea into reality. Explore our article to learn more and set up the process on your own.

Whitelist your IP addresses with 3Commas public API

In August we released this security-boosting feature for those users who like to control their 3Commas services through the API instead of the web interface. It works very similar to whitelisting IP addresses when you create an API key on an exchange. Any commands sent to 3Commas from your account must come from a whitelisted IP address or the request will be rejected. 

Check out the guide we created for users interested in taking advantage of our API connection. 

Go password-free by signing in to 3Commas with Google

If you’re new to 3Commas and use Sign in with Google, you can create a passwordless, more secure account with 3Commas. This means you don’t have to use a unique username or password, and don’t have to worry about remembering it or storing it somewhere safe. 

For existing 3Commas users, you can now merge your existing account with a Google, Facebook, or Apple account for faster log-ins. 

To sign in with Google, just go to the sign in page and click the “Continue with Google” button. 

Sign in. 

In August we launched a new, revamped page to make it easy for users to give feedback about which new tools and upgrades they would like to see prioritized. 

Any 3Commas user with an active account is welcome to upvote features and also encouraged to post features or improvements they’d like to see considered for development. This way our community helps shape the future of the 3Commas service by bringing features to life that could increase your trading profitability and enjoyment.



Give feedback here: https://feedback.3commas.io/

DCA Strategies, Grid Bot improvements, a unique contest from OKX, and more good news for 3Commas traders in our August 2023 update.

3Commas traders unleashed on the Coinbase Advanced and Bitget exchanges

DCA Strategies, Grid Bot improvements, a unique contest from OKX, and more good news for 3Commas traders in our August 2023 update. 

Forex trading involves trading positions on currency pairs, the values of which are compared relative to one another. Because Forex trading is a little more abstract and requires more research, many people believe Forex trading is reserved only for professional stock market traders.

That’s certainly not true! Anyone can learn to trade Forex and make money on this unique market. If you don’t know where to start, you’ve come to the right place. This ultimate guide will break down everything you need to know about trading Forex, including which platforms to use, what strategies to follow, and more.

Forex robot is a trading software that monitors the market for trading opportunities, and executes them automatically on your behalf. Most trading bots use AI algorithms to decide on entering and closing a position taking custom parameters you set into account. In some sense, a forex robot is an advanced and more embracing form of trading signals executed automatically, meaning you don’t have to analyze technical data and fundamentals of an asset you’re willing to trade. 

Each of the automated forex trading robots have a specific strategy, which has been designed and hard-tested by the developing team. Most strategies rely on “if/then” logic, meaning when a condition or a set of conditions are met, the bot launches the built-in logic pattern such as enter or close the position.

Here is a quick example of how if/else logic works with FX trading:

IF Condition: Imagine your robot targetS the EUR/USD pair and activates if the RSI for EUR/USD dips below 30 or goes above 70. 

Then Condition: If your robot notices RSI drop below 30 or goes above 70, it will instantly place a buy order for RSI < 30 and sell order for RSI > 70.

The example above is rather simplified for educational purposes. In fact, some bots use much more complicated if/then sequences to maximize returns and reduce risks associated with entry/exit. As a rule, complicated systems yield more rewards but also carry more risks compared to more straightforward strategies.

Bots work along with trading platforms that connect you to a Forex broker, which in turn, displays the real-time data related to the market. The data feed includes several parameters like open/close price, time intervals and variative feed on top.

Top-notch robots use market data analysis along with market risk forecasts to make the best trading decisions going forward. Bots can also spot major market trends, monitor local price fluctuations, track patterns, and more. A trading robot might either focus on one technical pattern, or it could analyze several patterns via indicators like moving average convergence divergence (MACD) and relative strength index (RSI) oscillator to get the highest yields.

You can usually access any bot through the provider’s website and either download or use it directly via a browser. Summing up, a forex robot is a popular tool for any trader — from newbies lacking technical knowledge to seasoned veterans in need of 24/7 automated trading.

What are the Pros and Cons of Using a Forex Robot?

In addition, forex robots do not sleep (obviously), meaning that they are in operation 24/7, ensuring that potentially lucrative opportunities are not missed. This is one of the major selling points and benefits of using these forex tools.

The main benefits of using a trading robot are that it eliminates emotions from the trading process and is a passive trading strategy. This means you don’t have to analyze technical indicators and fundamental data, or even understand how and why the crypto market functions. Different trading robots allow different levels of user involvement but they all work on pretty much the same logic. 

Even though bots have some potential loopholes, they limit emotional trading and maximize your potential to spot as many profitable deals as possible. Let’s boil down key pros of using bots.

Can combine several strategies simultaneously 

Fits both newbies and experienced forex traders

No risk of loss due to emotions like fear or rage trading

No downtime if connection is stable as bots operate 24/7 

Users can adjust software from manual to fully automated trading

Automated scanning allows monetizing more tradable currency pairs

Track charts, analyze patterns and take historical background into account to make efficient decisions.

The biggest disadvantage of automated trading bots is that they can’t be 100% accurate over the long run. The inclusive list of cons is highlighted below:

Some developers do not update the software

Disregards crowd psychology and emotions entirely

Potential of being scammed if software is a mere bite

Can’t predict volatility, hence less efficient if market is storming

Paternal strategies as most robots leverage intraday pattern for scalping

The market trends change fast, which may negatively affect some strategies 

How To Choose The Best Forex Trading Robot

Trying to choose the best trading robot? Keep the following tips in mind to maximize your chances of picking a suitable piece of trading software.

First and foremost, you need to consider the robot’s accuracy rating. The number one reason why you would be looking to use a trading robot is to find the best trading opportunities and make positive returns in a passive approach to cryptocurrency trading. With that said, you should be looking for a trading robot with an accuracy rating of at least 88%. 

You could try writing to the vendor and ask for his track record audited over say 2 years and see if you get a reply but don't hold your breath.

Another key metric to assess is the different trading opportunities the trading robot can identify. Usually, trading robots that scan a larger volume of cryptocurrencies and crypto crosses will find more unique trading opportunities. Certain AI algorithms also search for multiple technical patterns and trends to trade, which in turn increases your overall daily trading volumes. So, this is something to bear in mind especially if you are interested in executing high trading volumes per day. 

Finally, you might also want to look into the strategy and level of automation that your forex robot employs. For example, some robots may go for higher risk strategies, whilst others are more risk-averse. Double-check which rules your robot abides by and ensure they tally with your investment goals.

Automation level is another thing to look out for. As mentioned, most robots are fully automated, which will mean they require access to your trading capital. However, some providers (such as Learn2Trade) offer a very similar service to what a forex robot will supply – except you do not need to give access to your trading account. Many traders prefer this as it adds an element of safety to the proceedings.

Another thing to keep an eye out for is reviews and testimonials. The best types of reviews are Trustpilot reviews, as these are verified as real people and are not made up by the robot’s provider. Alternatively, some robots will have a dedicated Facebook page where current and former users may comment and add validity to the robot’s strategy.

You may also want to search the internet for the best forex robot reviews from reputable online sources. Numerous websites review the best forex robots and cover all of their features in detail – so make sure to read a few different reviews to get a comprehensive overview.

Perhaps, you know that risk management is a crucial part of successful trading over the long haul, but what if your bot breaks some risk management rules? 

Imagine you have $100,000 and you lose $50,000, that’s a 50% loss of your portfolio traders would call a drawdown. In other words, a drawdown is the reduction of your portfolio’s size after a series of losing trades. It’s the difference between peak and bottom, normally calculated and displayed as a % of your trading account. 

Big losses rarely fit any strategy. Which is why you might want to pick a trading bot that has the lowest possible drawback rate to protect your riches. Normally, bots with lower drawback rates yield you lower returns. However, such bots are more reliable over the longer investment horizon — a little patience goes a long way.

Developers use back-testing to understand whether the system is behaving appropriately and whether the Forex trading strategy is any good. 

In essence, back-testing is the process of testing a bot taking the historical data into account. It includes a simulation of each tick opening, closing at a certain price and reaching highs & lows. Once compared with back data, developers have a good sense of whether the strategy works well. 

Background check never hurts, especially when it comes to such important matters as trading your own money. Make sure to check some data behind a testing phase, what developers say about audits, how they highlight it, etc. You can digest more about technical back-testing here.

You can rely on reviews to make it simple, but only do so if you’re sure the reviews are not fabricated by aggregators or malicious actors paid for сonveying bulk of senseless feedback. Ideally, you should talk to a trader who already used the software and has something valuable to share. 

Before trading real, you might want to give your bot a try. Most trading platforms have a demo account option, which helps a lot once getting started. Make sure the platform provides a demo account feature. A bright example of a demo account provided would be 3Commas. 

3Commas — Overall Best Forex Trading Robot 2022

3Commas is an automated trading platform offering two types of easy-to-use bots. It’s the most straightforward way to start trading or bootstrap returns for traders of all kinds — from rookies to seasoned veterans alike. 

Platform offers two types of robots — Gordon is a Dollar Cost Average (DCA) bot that is the perfect way to get started with automated trading. It’s pretty intuitive and doesn’t require any additional skills or knowledge. Grid bots are more complex and used for out-of-trend occasions like sideways markets. 

Newbie traders can benefit from a free 3Commas plan. It provides access to all features except paper trading (demo account). Any user can set up the first DCA bot at no extra cost. To learn more about pricing and features, check out the plan page.

Minimum Deposit – No minimum deposit required, users can start with a free plan

The 1000pip Climber System is another Forex Expert Advisor that has stood the test of time. It has a range of real-live data verified by MyFXBook accounts showing the EA’s performance over a sustained period of time. 

One of the unique features that separates the 1000pip Climber System from the rest is 

a wide range of currency pairs available along impressive strategies implemented. These features ensure traders can adjust to varying market conditions. 

However, the system has some loopholes such as limited demo account features and lack of MT5 support. Also, reviews regarding the customer & live support are controversial.

Minimum Deposit – No minimum deposit required

Winrate – The developers highlight up to 20,000 pips during the three years

The Forex Gump bot is popular among traders due to its advanced algorithm which encompasses a wide array of market conditions for it to adapt quickly to ever-changing circumstances. The robot has a solid background in terms of performance, reliability, and customer reviews. Other perks include a 30-day money-back guarantee and demo account option available for a small pay. 

Even though the bot is time-tested and quite affordable, some EU customers might choose an alternative because it works best with high leverage around 100:1 or even more. Other drawbacks include MT4 only support and a limited currency pairs available for trading (AUD/USD, EUR/CHF, EUR/GBP, EUR/JPY, EUR/USD, GBP/USD, USD/CAD, USD/CHF, USD/JPY)

Minimum Deposit — $4,000 or equivalent if depositing in different currency for a regular account and $40 or equivalent if depositing in different currency for a micro account.

Winrate – up to 1,000% gains according to the website information

ForexVPS is a dedicated FX server for those who prefer fast-paced trading, this robot may be a good opportunity, with many currency pairs to trade MT4 & MT5. 

The bot has been tested with data from different dates, using different setups to limit potential spreads and minimize slippage. Simply put, its efficacy doesn’t depend on a specific broker, but you might want to keep your spreads as low as possible because the robot works on short timeframes. 

Minimum Deposit – $200 or equivalent if depositing in different currency

Forex Trendy bot is an innovative Expert Advisor that trades a wide range of currency pairs, supports many platforms, charts, and patterns. 

The robot operates on a unique automated trading algorithm that has historically picked trades verified by MyFXBook. More than 300 charts are available for traders along with dynamic trading logic and slippage & spread protection. Chart pattern recognition is a part of the basic version, entailing no extra costs for a user. However, some traders claim the robot lacks high-end customer support despite reasonably high payments per quarter. 

Minimum Deposit — $250 or equivalent if depositing in different currency

Winrate – The developers promise up to 90% accuracy if trades are made as directed

The Forex Diamond Bot is one of the leading FX trading robots and has earned very strong reviews from users. It has high ratings on Trustpilot and users have been particularly impressed with the performance of the robot.

As well as the strong performance verified by MyFXBook, traders have been particularly impressed with real-time calculations, versatility, and up to 80% winrate. However, some users prefer having live support, as they might need directions on how to use bot at the beginning. 

Minimum Deposit – $1,000 or equivalent if depositing in different currency

Winrate – 75% to 80% profits, depending on currency pair and strategy picked

EA Builder is beginner-friendly bot suitable for almost any trading preferences. The robot supports stocks, bonds, crypto, and FX currency pairs across multiple platforms like MetaTrader 4 & 5, TradesStation. Both free and paid versions are available — the difference is the paid version has advanced features designed to bootstrap trading results and yield as much as 200% depending on a strategy picked.

To accelerate the start for beginners, the platform has 15 video tutorials ranging 2 to 7 minutes in length. The topics include important aspects such as strategy creation, breakout strategies, daily breakout with pending orders, optimization, money management, automated entry, custom indicators, and more. 

Minimum Deposit – Depends on platform picked

What are the Risks Associated with Forex Trading Bot

Robots can’t think beyond the built-in set of rules they box. As a result, they only can perform a limited number of algorithms and it doesn’t matter how well these algorithms have been designed. Robots can use technical indicators to analyze and evaluate the market, but they lack abstract thinking and crowd psychology components. The mentioned factors cause a list of risks associated with using automated trading software.

Simulated performance results may have certain limitations. Unlike an actual performance record, simulated results do not take several components like lack of liquidity into account. Poorly-designed bots work on hindsights rather than thoroughly calculated models. As a result, the real-life profits and losses might not correlate with predicted ones — some bots don't indicate profits correctly, resulting in a wasted risk management. Summing up, you can make money in FX, but an automated trading system that has never been actually traded is not the way to do it.

Another related issue is data-mining, which haunts many FX software buyers. In essence, developers deliberately pick only a few good results, leaving the rest off-board. More refined cheating is testing a bot just once, instead of running multiple cycles. As a result, there are many FX trading software examples misleading, showing exaggerated profits, and reduced losses. 

If you’re willing to get a forex trading system, you can find a bot with track records provided, but not a controversial, mediocre simulation. 

A flash crash refers to a rapid price decline due to a withdrawal of orders followed by a quick recovery. Automated trading has exacerbated many flash crashes during the last decades. Some prominent examples are the $1 trillion DJ flash crash back in 2010, NYSE plummet in 2015 or a staggering 6% drop for a GBP/USD pair in 2016. 

Imagine an asset trading at $100 — most bots aim for close sales of $95 to minimize losses and $105 to make some profits. As long as the price goes lower, more algorithms are triggered along the downside journey, pushing the price even lower due to massive selloffs. Subsequently, the whole thing reverses itself as buying bots consider the price cheap and outstrip sellers until it finds a balance.

You can set up a bot working well 99% of the time, but that 1% may negate your returns. That’s why you should implement several strategies to diversify risks as much as possible. 

Some bots claim working smoothly no matter what the market is, but quite a few actually do so. If your FX trading system helps traders win regardless of market conditions like 3Commas, it’s a good one. 

As a rule of thumb, a bot tends to be effective if it leverages several opposed strategies rather than similar patterns. Signal-based, counter trend, and scalping are perfect examples of most widely used strategies to diversify profits and minimize losses. 

To avoid a scam scheme, you have to spot it first. Let’s have a look at four most common schemes related to FX bots. 

A trader cannot withdraw funds from the account because the platform is a one-day fake. The scammer either doesn't respond or makes unclear claims, justifying why you can't withdraw right now. To avoid it, pick a licensed and trusted broker regulated by a financial authority.

Some platforms provide trading signals in special Telegram/Discord groups, but most just suck money out of trustful pockets. These are called signal seller scams initiated mainly by investment account companies, pooled asset managers, and retail traders. Such groups or individuals with attractive portfolios charge newbies to share financial advice. Signal sellers usually vanish after taking the trader's money. To avoid it, you should either avoid signals or check the renowned ratings of signal providers. 

Spread scam is the oldest one existing. In essence, scammers offer large bid/ask spreads on a specific currency pair. As a result of unreasonably high spreads and commissions set, most traders lose money on such trades. Even though financial authorities monitor unethical behavior, Forex is a somewhat gray market at the moment, and newbies fall into traps frequently. To avoid it, you can compare spreads across several platforms. 

The scheme is also known as a pyramid structure similar to multi-level marketing (MLM) but with intangible goods. In essence, the owner recruits new paying members, who in turn attract even more underling members. Higher members get paid upfront fees until the whole system fails to operate eventually, which is just a matter of time. To avoid it, check reviews and pay attention to any red flags, the first being upfront fees.

Depending on a score, you can evaluate the risk level and decide whether to proceed with a particular piece of software. 

If the score is 30-50 points — you have a fairly high risk 

If the score is 20-30 points — you have an average risk

If the score is 0-20 points — you have a fairly low risk

The score doesn’t necessarily spot scammers, but might give you a good hint to judge for yourself. 

If you feel like starting trading using robots, we’ll guide you top to bottom and show how you can use the overall best Forex trading robot for 2022 by 3Commas.

Reach out to the 3Commas website and click on Try It Free to get started. 

Fill out all the fields required to create an account from scratch. Alternatively, you can use your Apple/Facebook account to pace up and keep going faster.

If you’re willing to start off using 3Commas Bot functions directly, you have to connect your exchange account with an API. Read more about connecting an exchange using an API key. 

Otherwise, if you want to practice first, you can use a demo account also known as a paper trading account. Read more about enabling demo mode. Please note that paper trading is only available for subscribers. In other words, 3Commas free doesn’t provide a demo account by default. 

Once you sign in, you’ll see the dashboard by default and the side menu left hand. Click on the trading bots tab to expand the list of available trading bots 3Commas provides.

For example, GRID bots work perfectly on fluctuating sideways markets, which is a fit for Forex trading. You can read more about AI GRID bots here.

Once you pick a bot type, proceed to its page and set trading criterias as limit prices, profits, and available amount. You can also set your bot manually by clicking on a Manual strategy tab instead of the default AI strategy menu appearing. 

Click on the Create button to finalize a bot creation. You can learn more about 3Commas bots here.

If you consider entering the Forex market, you should think about the way you want to do so, as the market is pretty established already, and over 80% of the volume traded are algorithms. 

One of the best ways to compete with a robot is another robot. However, you should carefully pick your trading software provider as most providers gloss over stats, sharing inflated numbers and returns. You might want to work with a reliable bot provider like 3Commas.

Automated forex trading bot is a trading software that monitors the market for trading opportunities, and executes them automatically on your behalf. Learn more in this article.

AI Forex Trading Bot For Automated Currency FX Trade | 3Commas

With the recent news about Robinhood, GME, and beginners jumping into the stock market and making thousands of dollars, more people than ever before are looking to start trading for the first time. But while many people will simply try to buy or sell stocks, others might be more interested in trading Forex.

This April, cryptocurrency exchange Hotbit got hacked. Consequently, the platform has shut down, stating that it needs to perform a “comprehensive inspection”. Everyone who had stored their digital assets on Hotbit could not access the funds or even close their trading positions. In a blink of an eye, thousands of people became potential victims of yet another crypto exchange hack. There have been many such incidents in the past, with losses exceeding billions of dollars if calculated at the current Bitcoin exchange rate.

On April 30, the cryptocurrency exchange Hotbit announced a cyber-attack that began on April 29 at 20:00 UTC. Hackers managed to “paralyze” almost all of the platform’s vital nodes. Representatives of Hotbit hastened to assure that criminals did not manage to get to the users’ funds, but their personal data ended up in the hands of hackers. According to the announcement, the platform suspended its work for at least seven days to eliminate the consequences of the incident. At the time of writing, the Hotbit website is still showing a maintenance notice with reference to the latest announcement about the hacking attempt.

Since hackers managed to gain access to customers’ personal data, the exchange warned that email addresses, phone numbers and registration information could be made public, while passwords and 2FA combinations could also be at risk of getting leaked. The platform pledges to reimburse potential losses on open leveraged trading positions and promises to close all open trades as maintenance goes on.

Some time after the announcement, a number of transactions were made from Hotbit wallets. The exchange stated these were transfers to their new cold wallet and users’ crypto “remains safe”. For example, below are two transactions from Hotbit’s wallet to 0x2AcDb44596E2b6FFBBF62614C9aaD9CD04980248 of 30 and 760 ETH. The transfer of funds caused bewilderment and concern among users; many of them began to speculate that there was, in fact, no hacking, and the exchange is just robbing the customers.

However, Hotbit’s Twitter account is still posting platform maintenance updates. Here’s the latest post from their official Twitter account:

Hotbit users have a reason to be worried – in the last few weeks alone two major Turkish crypto exchanges have been at the center of a major fraud scandal. We would like to take a closer look at the Vebitcoin and Thodex platforms.

What’s going on with crypto exchanges in Turkey?

On Monday, April 19, users of the Thodex cryptocurrency exchange started complaining about disruptions in the platform’s operation. The exchange continued functioning for about a day, and the last record by CoinMarketCap on Tuesday showed $585 million of daily trading volume on Thodex. That is when the platform ceased to function and its users lost a chance to withdraw their funds up till now.

Local news agency Anadolu Agency reported that the Financial Crimes Investigation Council (MASAK) began investigating Thodex CEO, Faruk Fatih Ozer, on Wednesday; on top of that, authorities froze the exchange’s bank accounts on Thursday. The agency reports that the Istanbul prosecutor’s office also asked the victims to reach the authorities and testify. A little later, police searched the exchange’s headquarters in Istanbul. Ozer left Turkey and flew to the Albanian capital, Tirana, on Wednesday. Below is a photo of him obtained by law enforcement from airport officials.

However, an announcement appeared on the homepage of Thodex, in which Ozer tried to dispel all related suspicions. Allegedly, the exchange’s technical department is investigating “abnormal fluctuations in accounts identified a week earlier, affecting about 30,000 users”. He said the platform remains closed as the investigation into the “incident” continues. Ozer adds that he went abroad as part of late negotiations with new foreign investors, rather than fleeing with the assets (he is now suspected of stealing more than $2 billion). He also said that the exchange expected to open withdrawals in the coming days. That hasn’t happened yet.

On his Twitter page, Ozer posted the following message, which was later deleted:

“If I had any intention of raising money and fleeing, I would have illegally withdrawn millions of dollars from our bank accounts. But the money is still there.”

Interestingly, a decision of the Turkish government preceded this delicate Thodex situation. Recall that on April 16, Turkey’s central bank announced a ban on cryptocurrency usage in domestic payments. The bank stated that the decision was made because the digital assets could “cause unrecoverable losses” among the population.

Almost simultaneously, another Turkish cryptocurrency exchange, Vebitcoin, ceased its operations. On Friday, April 23, the following message appeared on its homepage:

“Due to recent events in the cryptocurrency industry, our transaction activity has significantly exceeded our expectations. We would like to state with regret that this situation has forced us to make extremely difficult decisions. We have decided to cease our operations in order to meet all the requirements [of regulators].”

Financial regulator MASAK has blocked Vebitcoin bank accounts and launched an investigation. To date, four people have been detained as part of the investigation, with another 62 suspects arrested in the Thodex case. Farooq Fatih Ozer, the CEO of Thodex, is still wanted.

Let’s go back a few years back and discuss one of the most famous incidents in the cryptocurrency industry: the fall of the Mt. Gox exchange. Mt. Gox was founded by American programmer Jed McCaleb before Bitcoin even existed. In 2007, he registered the domain for the Magic the Gathering Online eXchange platform, where Magic the Gathering game cards were to be traded. But later, when Bitcoin started to gain popularity, McCaleb decided to use the Mt. Gox domain to host a cryptocurrency platform. In 2011, he sold the business to French developer Marc Karpeles (pictured below), or more specifically to the Japanese company TIBANNE Co., Ltd. owned by Karpeles. By 2013, Mt. Gox was hugely successful – during its peak, it handled more than 70% of bitcoin trades.

In 2014, there was an event that immediately received widespread publicity even outside the crypto industry – the exchange was hacked and hackers managed to steal 744,000 BTC; after some time, the trading platform ceased its operation for good. The losses at the time reached $460 million.

Although all the high-profile events began to unfold only in February 2014, it became clear sometime later that Mt. Gox had not been doing very well since June 2011. At that time, the company was the victim of its first hacking attack, in which hackers managed to gain access to Mt. Gox’s auditor’s computer and artificially drop bitcoin’s price to 1 cent to further buy about 2,000 BTC.

Mt. Gox has since beefed up its security, but that was not enough to protect the exchange. An investigation after the 2014 incident revealed that the private key for the Mt. Gox wallet was unencrypted and stolen back in 2011. However, it is unclear whether it was obtained through hacking or with the help of an insider. Criminals utilized this private key to withdraw bitcoins from customer accounts over the next few years.

In fact, Mt. Gox lost its solvency two years before it shut down for good. While its potential debts to customers grew due to stolen funds, bitcoins continued trading on the platform as if nothing had happened – in 2013 it became the industry’s leading player and one of the most recognizable cryptocurrency-related brands.

Why didn’t anyone know about what was happening? Many former Mt. Gox employees later cited mismanagement and disorganization within the company. An anonymous developer reported that the company didn’t even use version control. This standard tool was used to prevent colleagues from accidentally overwriting the work of others if they worked on the same file. Another problem was that the only person who could approve changes to the platform’s source code was Mark Karpeles himself. This meant that even important security updates and bug fixes could take weeks to get approved.

In addition to the technical problems, the first challenges to Mt. Gox’s existence as a legitimate firm began to emerge in 2013. That May, a former Coinlab business partner sued Mt. Gox, claiming a breach of their contract. On top of that, Mt. Gox was under investigation by the U.S. Department of the Interior for allegations that the exchange was operating without a license in the United States. At the end of the day, the U.S. government seized more than $5 million from the company.

The litigation over the missing funds from Mt. Gox continues till date. One of the latest news is the approval of a new civil rehabilitation plan for the bankrupt company, announced in February this year by the exchange’s trustee Nobuyaki Kobayashi. However, many Mt. Gox creditors and traders are still seeking the compensation they were promised, with court cases dragging on for years.

In July 2011, the BTC-e trading platform was launched. The platform was built to cater to the needs of the Russian-speaking community. It offered a BTC-RUB exchange, which made BTC-e arguably the most popular crypto exchange in the CIS space at that time.

Platform’s daily trading volumes grew from $600,000 to $66 million between 2013 and 2017. However, on July 25, 2017, BTC-e stopped all operations and announced “unscheduled maintenance”. Since then, the exchange never went online again.

At about the same time, 38-year-old Russian citizen, Alexander Vinnik, was arrested in Greece and accused of laundering $4 billion dollars through the BTC-e platform. The U.S. authorities and the FBI seized operations of BTC-e, confiscated the domain, and fined the company $110 million. Vinnik was identified as one of the owners and administrators of the trading platform. A few months later, organizers tried to relaunch BTC-e, but only by September, a “new version” of BTC-e appeared. The exchange was rebranded to WEX and moved to the wex.nz domain.

The name was not the only thing to get changed – new owners came in as well. New management (Vinnik’s former partner Alexander Bilyuchenko and one of BTC-e’s major clients Dmitry Vasilyev) took over the digital assets, user database and all relevant information. WEX pledged to repay the previously lost funds in fiat and cryptocurrencies, though only 62 percent of the funds were returned from the reserve fund, never seized by the FBI. The remaining 38 percent was planned to be repaid by issuing an internal WEX token, which the exchange would then gradually buyback from users.

However, in 2018 history repeated itself: WEX froze funds, and sometime later, information popped out that more than $450 million had “escaped” from the cryptocurrency platform. This is the last point in the history of the existence of BTC-e, although many clients have not yet seen (and are unlikely to see) their compensation.

This is just the “tip of the iceberg” and by far, not all hacking attack cases were mentioned. However, they all have one unfortunate outcome – a partial or complete loss of customers’ funds. Despite the fact that the industry’s capitalization has already exceeded the $2 trillion mark, many sectors are still the “Wild West” – a place where users are solely responsible for their funds.

To avoid becoming another victim of a new hacker attack or fraudulent scheme, avoid keeping significant parts of your savings on the exchange. Deposit only those funds that you are willing to lose. We strongly recommend you to use a cold wallet, completely isolated from the Internet to store cryptocurrencies long-term. And remember, from the moment coins are transferred to the exchange, they are actually at the company’s disposal and you have no fundamental control over the funds.

Why holding crypto on exchanges is a bad idea

This April, cryptocurrency exchange Hotbit got hacked. Consequently, the platform has shut down, stating that it needs to perform a...

Analytics | 3Commas Blog

Explore the defi technical analysis for a deeper dive into cryptocurrency and blockchain topics in our 3Commas Blog.

Technical Analysis Category | 3Commas Blog

Explore the defi trading for a deeper dive into cryptocurrency and blockchain topics in our 3Commas Blog.

Trading Category | 3Commas Blog

Explore the cryptocurrency category for a deeper dive into trading and blockchain topics in our 3Commas Blog.

Blockchain Category | 3Commas Blog

Explore the defi category for a deeper dive into trading and blockchain topics in our 3Commas Blog.

Exchanges