Updated: ZBG told 8btc that they have apologized to the user for their inappropriate words by the customer service who was dealing with this incident, and helped to reach the agreement between the two users. The exchange explains that ZBG, as an independent platform, is not responsible for the controversy caused by the bugs of any user’s quantitative trading. The frequent tradings of the accounts have triggered the anti-hacking mechanism, which led the exchange to have a short freeze period for the profitable account, in an effort to further check whether it is conducted by hackers.

As previously reported by 8btc, the user of the platform discovered a bug in the trading rules and earned $30,000 by trading a shitcoin with trading bots thousands of times. When the exchange found out, they froze his account, with $60,000 balance yet to withdrawn.

A Chinese cryptocurrency investor claimed that crypto exchange ZBG (a brand under ZB.com) reported him to the police after he earned some money on the trading platform.

“ZBG’s customer service said they have called the police to arrest me, because I make money on the exchange (which has yet to be withdrawn)! Please help!”

The crypto investor surnamed Zhang asked for help in a post on 8btc Forum, China’s oldest and largest crypto community. The post has been viewed for over 11,000 times and has 100+ comments in two days.

Zhang said his account on ZBG.com and the account on ZB.com have been frozen “for no reason”, with 400,000 yuan (roughly $60,000) balance in the account yet to be withdrawn. He tried to report the asset freeze to police, but was rebuffed when they said it cannot be filed for a case because few info about the exchange such as office address could be provided.

Why accounts frozen?

It turned out that Zhang’s accounts were frozen in large part because he was “too clever”.

The story started with Zhang’s frequent transactions of PCC/ZT on ZBG platform. The day before his accounts were frozen, he sold out a total of 10,000 PCC, an altcoin on the exchange.

After several small deals, he found a tricky rule – there’re no pending orders with the bid ranging from 10 yuan to 20 yuan on the platform, so long as he posts buy orders offering over 10 yuan and meanwhile posts sell orders priced higher than the buying price, he could pocket the price difference, and there would always be buyers/sellers taking his orders.

The practice sounds very like wash trading, a practice of an individual or individuals repeatedly trading assets back and forth to simulate organic volume. It is a way to make an exchange look more popular than it really is, which is often conducted by trading bots. In this case, Zhang detected the “bug” and might have taken advantage of it to trade with the bots. Surprisingly, he won the game.

Using this trick, Zhang earned about 700,000 ZT (the coin issued by ZBG) shortly in two days, that’s approximately 200,000 yuan (roughly $30,000); while on the third day, he waked up finding his accounts frozen.

The reply he received from the exchange was that Zhang has profited illegally as they had received complaints from users who were victims of Zhang’s malicious ttrades, claiming he has violated the user agreement that

“Users shall not maliciously interfere with the normal operation of cryptoasset transaction, and shall not influence the normal operation of the platform and other customers’ activities on the platform by any technical means or other means.”

Possible to earn money from exchange?

It is common to see exchange malfunction or bugs. In most cases, users often fall the victims to swallow the bitter pill; while this time, the user took advantage of the exchange and made money, but the exchange still has the upper hand by brutally freezing user’s account. Though he played some tricks, many people on the forum tended to side with the guy over the exchange.

The exchange said users who suffered great loss from Zhang’s malicious practice had reported it to the police, and the platform would provide Zhang’s KYC info for police if necessary. The afterward treatment of the exchange actually has no problem.

What infuriated Zhang was that the customer service replied,

“You have earned a lot since you were registered on the exchange, which has led many users to great losses.”

While according to Zhang, prior to it, he had lost more than 800,000 yuan ($120,000) on the exchange, but he bears it with few complaints.

8btc has reached out for ZBG platform, the reply is ambiguous reading that

“Please be assured that user’s account won’t be blocked for no reason”.

ZB.com was founded in China in 2013, and moved to British Virgin Islands for the country’s ban on crypto exchanges. Ealier this month the exchange surpassed Binance as the largest crypto exchange in terms of trading volume at one point. This raised many people’s speculations that the exchange was manipulating its trading volume, considering most of the exchanges have a falling trading volume during the same period of time.

At the time of this writing, ZB.com is the fourth largest crypto exchange by trading volume, handling around $369 million in the last 24 hours, according to CoinMarketCap.