Introduction: Bitforex Through Time and Its Current Status

The cryptocurrency market is fraught with countless opportunities and volatilities, but alongside these opportunities, there are significant risks that make choosing a reputable and secure trading platform crucial. Cryptocurrency exchanges, as the main gateways to this market, play a key role in user experience and safeguarding traders' capital. In this context, a comprehensive and precise review of exchanges, especially in the face of unexpected events, is essential for any professional investor. This report provides an in-depth analysis of Bitforex, a platform that has undergone significant changes in its operational status in recent years.

History and Founding of Bitforex

Bitforex was founded in Hong Kong in 2017. The primary goal of launching this exchange was to become a global digital asset platform with a strong focus on security and user experience. In its early days, Bitforex achieved considerable success by adopting an aggressive marketing strategy and offering innovative features. These features included perpetual contracts, a robust spot market, and diverse derivative products that attracted both novice and professional traders. Before its recent operational halt, Bitforex had independent offices in countries such as Germany, South Korea, Singapore, and Russia, serving over 6 million users in more than 200 countries and regions worldwide. This global expansion and service diversity positioned Bitforex among the top 30 exchanges by aggregated trading volume in January 2023, with its spot trading volume reaching $2 billion per day in early 2024.

Current Operational Status: Halt of Activities, Police Investigations, and Withdrawal Challenges

Despite its initial growth and success, Bitforex faced a severe crisis in February 2024. On February 23, 2024, the exchange abruptly ceased operations, and its website became inaccessible. This occurred after reports of a suspicious outflow of approximately $57 million from the exchange's hot wallets. After several months of silence, the Bitforex team announced in July 2024 that operations had been suspended due to a police investigation in Jiangsu Province, China, and the detention of team members. This sudden and sensitive incident prevented timely communication with users and the public.

According to the official statement, the Bitforex platform reopened on July 24, 2024 (UTC), solely for "withdrawals" of assets. However, trading operations, deposits, and new registrations remain suspended and will not be resumed. This means users cannot perform any new buy or sell transactions on the platform and can only withdraw their existing assets. Furthermore, holders of perpetual contracts may be required to undergo Know Your Customer (KYC) procedures again. Another significant challenge is the freezing of some Bitforex accounts with their assets on third-party platforms like OKX, which may affect the withdrawal process for some users. This situation has raised serious concerns about Bitforex's reliability and future.

Importance of Choosing a Reputable Exchange in a Volatile Crypto Market

The Bitforex incident clearly underscores the critical importance of selecting exchanges with strong credibility, robust security, and operational transparency. In a rapidly changing market with high price volatility and security risks, trust in the trading platform is paramount. This incident demonstrates that even exchanges ranked highly and experiencing significant trading volumes can quickly collapse if they lack regulatory transparency and robust security measures. The consequences of such events can be the complete loss of user funds. Therefore, investors must always pay close attention to an exchange's security history, regulatory status, and communication transparency, rather than relying solely on their claims. This makes the need for thorough and continuous review of trading platforms even more crucial.

Part One: Understanding Bitforex (Prior to Full Operational Halt)

To fully comprehend Bitforex's current status and evaluate its capabilities, it is necessary to first examine its features and functionalities before its complete operational halt. This section provides a snapshot of Bitforex during its fully operational period.

1.1. Key Features and Services

Prior to facing its recent challenges, Bitforex offered a range of services and features that distinguished it in the competitive cryptocurrency market.

Account Types and Registration Process (KYC)

Bitforex required Know Your Customer (KYC) verification for asset withdrawals. This process involved providing identification documents such as passports, phone numbers, and other essential identity information. This procedure is a standard in the cryptocurrency industry, implemented to combat money laundering (AML) and terrorist financing (CTF), and is legally mandated in many countries. Before the restrictions were imposed, the initial registration process on Bitforex was relatively simple and quick, allowing users to create accounts using their email or phone number. This ease of entry was one of the factors that attracted users to the exchange.

Supported Cryptocurrencies and Trading Pairs

One of Bitforex's prominent strengths was its wide variety of supported cryptocurrencies and trading pairs. The exchange listed over 1700 digital currencies and, as of January 2023, featured over 300 projects on its platform. This extensive selection allowed users access to a broad range of digital assets and to implement diverse trading strategies. This feature set Bitforex apart from many of its competitors.

Trading Tools and Financial Products

Bitforex offered a suite of trading tools and financial products to cater to the needs of various traders. These services included Spot Trading, Perpetual Futures, Turbo Starter, and other financial services. Capabilities such as perpetual contracts and a robust spot market were among the exchange's initial and attractive offerings. Additionally, Bitforex provided Margin Trading with leverage up to 10x in some markets , enabling traders to take larger positions with less capital and multiply their profits (or losses).

Liquidity and Market Depth

Liquidity and market depth are crucial indicators for a cryptocurrency exchange. Liquidity refers to the ease with which an asset can be bought or sold without significantly impacting its price, while market depth indicates the market's ability to absorb large orders without substantial price changes. In the past, Bitforex had decent liquidity due to its high trading volume. This high volume could contribute to smoother order execution and reduced slippage. However, it's important to note that in 2019, Chainalysis accused Bitforex of manipulating its trading volumes. These accusations could affect the credibility of the exchange's reported liquidity and indicate a lack of transparency in its operations.

API Capabilities for Developers

Bitforex provided public API (Application Programming Interface) documentation on GitHub for developers and algorithmic traders. These APIs allowed users to connect external applications, trading bots, and automated systems to the Bitforex platform. The availability of APIs is crucial for executing advanced trading strategies, including arbitrage, as it enables access to real-time market data and rapid order execution.

1.2. Fee Structure

The fee structure is a significant factor in attracting and retaining traders, especially for those with high trading volumes or those looking to implement profitable strategies like arbitrage. Bitforex also had its own specific structure in this regard.

Trading Fees (Maker/Taker)

Bitforex utilized a tiered trading fee structure designed to attract high-volume traders. This structure was generally cited as one of Bitforex's advantages. Based on available information, the Maker and Taker fees for most cryptocurrencies on Bitforex were 0.06%. Maker fees are charged to traders who add liquidity to the order book by placing limit orders, while Taker fees are charged to traders who remove liquidity by executing market orders.

Deposit and Withdrawal Fees

Depositing funds into a Bitforex trading account had no minimum amount and was free of charge. This feature was attractive to new users and those looking to start with a small capital. However, cryptocurrency withdrawal fees on Bitforex depended on the respective blockchain network cost. This is a standard practice across most cryptocurrency exchanges, as the cost of transferring assets on the blockchain is passed on to the user. Although precise information on withdrawal fees for each specific asset on Bitforex is not comprehensively available, exchanges generally apply different fees for each cryptocurrency based on network conditions and their own policies.

1.3. Operational Speed and Timing

Speed in exchange operations, including trade settlement times and withdrawal speeds, is of paramount importance for traders, especially in volatile markets.

Trade Settlement Time

Bitforex had upgraded its trading engine during its operation to support higher transaction volumes and faster order execution. The speed of order execution on cryptocurrency exchanges is critical, particularly for professional traders and those employing high-frequency strategies. In financial markets, even minor delays in order execution can lead to missed profitable opportunities or increased losses.

Withdrawal Request Speed and Settlement Time

Withdrawing assets from an exchange is one of the most crucial aspects of user experience. Based on available information, most withdrawals from Bitforex were typically processed within two hours. However, in some specific cases, the withdrawal process could take up to 12 hours. Bitforex also had different withdrawal limits for each cryptocurrency, applied both "per transaction" and "per day." To expedite the withdrawal process, Bitforex had specific conditions, including enabling two-factor authentication (2FA) for at least five days or whitelisting withdrawal addresses. These measures were part of the security protocols designed to ensure the safety of user funds.

Customer Support Responsiveness

The quality and speed of customer support responsiveness play a significant role in user satisfaction. Prior to the complete operational halt, Bitforex claimed to offer 24/7 customer support. This assured users that they could access assistance at any time if they encountered issues or needed guidance. However, following the sudden suspension of operations in February 2024, numerous user reports indicated that support requests went unanswered, and community managers in communication channels became inactive. This lack of responsiveness during a crisis severely damaged user trust.

Insight: The Contradiction Between Security Claims and Actual Performance

Before its complete operational halt, Bitforex presented itself as a "highly secure" exchange, emphasizing the implementation of advanced security measures. These measures included using multi-signature cold wallets for storing the vast majority of funds (98% or 99.5%) , two-factor authentication (2FA) , and algorithmic monitoring to identify suspicious behavior. It was even claimed that the exchange had experienced no security breaches since its launch.

However, the February 2024 incident, which involved the outflow of $57 million from hot wallets and a complete operational halt , severely contradicted these claims. This stark contrast between security assertions and the exchange's actual performance indicates that a platform's credibility is not solely measured by listing its security features but must be substantiated by its operational track record and its ability to handle crises. This situation serves as a serious warning to users not to solely trust exchange claims but to meticulously examine their actual history in dealing with attacks and crisis management. This incident also highlights the inherent risks in centralized exchanges, even those seemingly highly secure, and emphasizes the importance of thorough due diligence before depositing capital.

Part Two: Bitforex Credibility and Security: Review of Incidents and Protective Measures

Credibility and security are two fundamental pillars of any cryptocurrency exchange. Examining Bitforex's track record in these areas, especially in light of recent events, is crucial for understanding the risks associated with it.

2.1. Security Records and Major Incidents

Bitforex's history, particularly in recent months, is intertwined with significant security and operational incidents that have severely impacted its credibility.

Review of Past Cyberattacks and Security Breaches

The most significant and impactful security incident related to Bitforex was the February 2024 event. On this date, approximately $57 million in cryptocurrency was suspiciously moved from the exchange's hot wallets. Immediately after this fund outflow, Bitforex abruptly ceased operations, and its website became inaccessible. This event was widely regarded by many analysts and users as a "rug pull" or at least a "suspicious exit scam."

Prior to this major incident, Bitforex also faced regulatory challenges and accusations. The exchange had been under scrutiny by Japanese regulators for operating without a license. Furthermore, in 2019, blockchain analytics firm Chainalysis accused Bitforex of manipulating and inflating its trading volumes. These accusations indicated that even before the February 2024 incident, Bitforex's operational transparency and integrity were questionable. The resignation of Bitforex CEO Jason Luo just one month before the sudden operational halt further fueled these concerns and ambiguities.

Impact of Incidents on Credibility and User Trust

The cumulative effect of these incidents, particularly the sudden halt and fund outflow, severely damaged Bitforex's credibility and led to a widespread loss of user trust. Numerous reports indicated that users were unable to access their funds after the exchange's shutdown, and their repeated support requests went unanswered. This lack of transparency and responsiveness during a crisis not only harmed Bitforex users but also negatively impacted overall trust in centralized exchanges within the cryptocurrency industry. This situation places Bitforex in the category of very high-risk exchanges, and using it, even for limited withdrawal operations, is accompanied by significant uncertainty and concern.

2.2. Implemented Security Measures (Prior to Full Halt)

During its full operational period, Bitforex claimed to have implemented advanced security measures to protect user assets and information. However, the significance of these measures must be re-evaluated in light of recent events.

Cold/Hot Wallet Storage Systems

Bitforex utilized a hybrid system of hot and cold wallets. The exchange claimed that the vast majority of user assets, between 98% and 99.5% , were held in cold wallets (offline and multi-signature). This offline storage method was designed to protect assets from online cyberattacks. Only 0.5% of funds were kept in hot wallets for daily operations and withdrawal processing. Bitforex also stated that withdrawals from cold wallets required approval from globally dispersed management team members , which was considered an additional security layer to prevent unauthorized access to funds. However, the incident involving the outflow of $57 million from "hot wallets" in February 2024 indicates that even with this system, vulnerabilities existed in hot wallet management or the overall security system.

Two-Factor Authentication (2FA) and Other Security Protocols

Bitforex had implemented two-factor authentication (2FA) to enhance user account security. This system provides an additional layer of protection for logins, withdrawals, and API access. In addition to 2FA, Bitforex used SMS verification and security insurance coverage as extra precautions to ensure safety. Other security features mentioned by Bitforex included encrypted communications, customizable API permissions for controlling data access, intelligent threat detection for real-time login monitoring and IP tracking, and withdrawal protection with behavioral monitoring and address whitelisting. This set of protocols was designed to create a secure trading environment for users.

Suspicious Behavior Monitoring and Risk Control Systems

Bitforex claimed to use algorithmic monitoring technologies to identify abnormal behavior on the platform and respond appropriately. These systems were designed to detect suspicious activities and prevent market manipulation or fraud. Furthermore, Bitforex employed advanced security protocols to protect against DDoS (Distributed Denial of Service) attacks to improve server performance and identify and block malicious traffic in real-time. The Bitforex security team also emphasized continuous updates to its Linux systems to counter emerging threats and adhere to best security practices. However, the February 2024 incident shows that these systems failed to prevent the large-scale fund outflow and operational halt, raising questions about their actual effectiveness in the face of more serious threats.

2.3. Regulatory Status and Geographical Restrictions

Regulatory status and geographical restrictions are vital aspects for assessing an exchange's credibility and accessibility. These factors can impact the legality of an exchange's operations and users' ability to access its services.

Regulatory Status and Licenses

Bitforex was based in Hong Kong. However, its regulatory status in recent years has been accompanied by ambiguities and warnings. In March 2024, the Hong Kong Securities and Futures Commission (SFC) added Bitforex to its alert list due to "suspected fraud." The SFC explicitly stated that Bitforex lacked the necessary license or registration to operate as a Virtual Asset Trading Platform (VATP) in Hong Kong. This warning was issued after Bitforex's sudden operational halt and the outflow of $57 million in funds.

Additionally, Japanese regulators had previously warned Bitforex for operating without a license in that country. This indicates that Bitforex operated in multiple jurisdictions without fully complying with regulatory requirements. Although Bitforex was listed as "regulated - Hong Kong" on Notabene's VASP (Virtual Asset Service Providers) list , this information contradicts official SFC warnings and suggests that its regulatory status may not have been fully transparent or may have changed. This discrepancy in regulatory information adds to the ambiguities surrounding Bitforex's credibility.

Countries Bitforex Does Not Serve

Given its current status and regulatory warnings, Bitforex currently offers no new trading or deposit services to any country. This operational halt has completely cut off global access to the platform.

In the past, international exchanges typically did not serve certain countries due to sanctions and legal restrictions. For example, Bitfinex (whose information is mistakenly attributed to Bitforex in some documents) did not serve countries like Iran, the United States, Canada, the United Kingdom, Spain, Cuba, North Korea, Syria, and Venezuela due to sanctions and legal requirements. These restrictions highlight the regulatory pressures on global exchanges to limit access in high-risk and sanctioned regions. Given that Iran is also under international sanctions, even if Bitforex were fully operational, Iranian users would likely have faced restrictions in accessing its services.

Insight: Regulatory and Operational Risks as Key Factors in Exchange Collapse

The examination of Bitforex's situation clearly demonstrates that a lack of regulatory transparency and operational issues can directly lead to an exchange's collapse. Bitforex operated in multiple jurisdictions, including Japan and Hong Kong, without the necessary licenses. This non-compliance with regulations made it vulnerable to supervisory actions. Concurrently, major operational problems such as the $57 million fund outflow and the detention of team members indicated deep weaknesses in the exchange's internal management and security.

This situation reflects a recurring pattern in the cryptocurrency industry: exchanges that fail to adapt to regulatory requirements or lack robust security infrastructures ultimately face severe consequences. Bitforex's previous claims of being "highly secure" and having no security breaches stand in stark contrast to the reality of the "rug pull". This contradiction emphasizes the importance of thoroughly examining an exchange's regulatory status and security track record. Even if an exchange makes grand claims about security, its operational history must validate these claims. This is particularly crucial for users operating in highly restricted regions (like Iran), as access to legal recourse and fund recovery in case of issues would be nearly impossible. These events push users towards greater vigilance and a lack of complete trust in centralized exchanges.

Part Three: Arbitrage in the Crypto Market and Bitforex's Role

Arbitrage is an advanced trading strategy in the cryptocurrency market that demands speed, accuracy, and access to suitable platforms. This section explores the concept of arbitrage, its requirements, and Bitforex's role (or lack thereof) in this strategy.

3.1. Concept and Types of Crypto Arbitrage

Arbitrage in the cryptocurrency market is a strategy that seeks to exploit temporary price differences of an asset across various markets or trading platforms. The main goal is to buy an asset at a low price in one market and simultaneously sell it at a higher price in another market to secure a risk-free (or very low-risk) profit.

Concept of Arbitrage

Cryptocurrency markets, due to their decentralized nature, often experience price discrepancies. These discrepancies can arise from differences in supply and demand, liquidity, information dissemination speed, or even momentary errors in price quotes between exchanges. An arbitrageur identifies these price differences and profits by buying at the lower price and selling at the higher price. This process helps increase market efficiency, as prices quickly move towards equilibrium by exploiting these differences.

Types of Arbitrage

In the cryptocurrency market, various arbitrage strategies exist, each aiming to exploit specific discrepancies:

• Standard Arbitrage (Cross-Platform Arbitrage): This is the most common type of arbitrage, involving identifying and exploiting price differences of a cryptocurrency between two or more centralized exchanges (CEXs). For example, if Bitcoin is cheaper on Exchange A than on Exchange B, a trader can simultaneously buy on Exchange A and sell on Exchange B.

• Triangular Arbitrage: In this strategy, a trader exploits price differences between three cryptocurrencies on a single exchange. For instance, converting BTC to ETH, then ETH to USDT, and finally USDT back to BTC, if the conversion rates result in more BTC than initially held. This strategy requires rapid execution and low trading fees.

• Spatial Arbitrage (International Arbitrage): This type of arbitrage focuses on price differences that arise in international exchanges due to variations in regional demand or specific country regulations.

• DEX/CEX Arbitrage: This strategy involves exploiting price differences between centralized exchanges (CEXs) and decentralized exchanges (DEXs). Since DEXs are governed by Automated Market Makers (AMMs) and are separate from their centralized counterparts, arbitrage opportunities can frequently appear between these two types of platforms.

Opportunities and Challenges of Arbitrage in the Crypto Market

The crypto market, due to its decentralized nature, high volatility, and regional liquidity differences, offers more arbitrage opportunities than traditional financial markets. These opportunities can be highly profitable but come with specific challenges.

Challenges: Arbitrage opportunities in the crypto market are very short-lived and disappear quickly. Intense competition from other traders and arbitrage bots exacerbates this. Additionally, trading fees and withdrawal fees , liquidity limitations in shallow markets , and withdrawal processing times can significantly reduce or even eliminate arbitrage profitability. Issues related to wallet maintenance, delays in depositing funds to the destination exchange, and local restrictions (such as KYC) can also hinder successful arbitrage execution.

3.2. Requirements for a Professional Arbitrage System

To succeed in crypto arbitrage, especially in today's competitive environment, merely identifying opportunities is not enough. A professional arbitrage system must possess specific characteristics.

Need for Speed, Accuracy, and Real-time Data Access

Arbitrage, due to the fleeting nature of opportunities, requires extremely fast execution. Price differences in the crypto market can appear and disappear in fractions of a second. Therefore, arbitrage traders must be able to identify opportunities in milliseconds and immediately execute buy and sell orders. This necessitates access to real-time market data from multiple exchanges, including order books and trade execution information. A high-speed and stable internet connection, along with direct and low-latency access to exchanges via API (Application Programming Interface) , is crucial for maximizing execution speed. Any delay in data reception or order execution can mean a lost profit opportunity.

Importance of Liquidity and Market Depth on Exchanges

Liquidity and market depth on exchanges used for arbitrage are of paramount importance. A market with deep liquidity means there are many buy and sell orders at various price levels in the order book. This feature allows the market to absorb large orders without significantly impacting the asset's price. For executing arbitrage strategies, especially with high volumes, deep liquidity is vital, as it assures the trader that they can buy or sell the asset without causing significant price slippage. Conversely, shallow markets with low liquidity experience severe price fluctuations from large orders. This significantly increases arbitrage risk, as the asset's price may change so much before the trade is completed that the expected profit is lost or even turns into a loss.

Role of Automated Tools and Arbitrage Bots

Given the high speed of the crypto market and the fleeting nature of arbitrage opportunities, the use of automated tools and arbitrage bots has become almost indispensable. Arbitrage bots are software programs designed to automate the process of identifying arbitrage opportunities and executing trades. These bots can process vast amounts of real-time market data from multiple exchanges or trading pairs and identify opportunities in milliseconds, which is impossible for a human.

Key advantages of using arbitrage bots include:

• Rapid Opportunity Detection: Bots continuously scan market data and detect price discrepancies as soon as they occur.

• Instant Trade Execution: Once an opportunity is identified, the bot immediately executes buy and sell orders to exploit the price difference. This eliminates delays associated with manual trading.

• Reduced Human Error: By automating the process, bots minimize human error, such as miscalculating prices or entering incorrect order details.

• Support for Complex Strategies: Bots can execute more complex arbitrage strategies, such as triangular arbitrage or arbitrage between centralized and decentralized exchanges, with high accuracy and speed.

These bots utilize algorithmic trading principles to analyze data, identify opportunities, and manage risk. By connecting to user accounts on various exchanges via API keys, they can automatically execute trades across multiple platforms simultaneously.

3.3. Evaluating Bitforex for Arbitrage

Given the requirements of a professional arbitrage system, evaluating Bitforex for this purpose, especially in light of its current status, is essential.

Analysis of Bitforex's Capabilities for Executing Arbitrage Strategies (Considering Current and Past Status)

Current Status: Due to the complete halt of trading operations, deposits, and new registrations on Bitforex since February 2024 ,

Bitforex is currently absolutely unsuitable for arbitrage. There are no active trading opportunities on this platform, and its "withdrawal-only" mode is accompanied by numerous challenges and uncertainties. Arbitrage requires active markets, fast and unrestricted deposit and withdrawal capabilities, and the ability to execute orders in both directions (buy and sell), none of which are available on Bitforex.

Past Capabilities: In the past, Bitforex, by offering a wide variety of cryptocurrencies (over 1700 assets) and a tiered fee structure (0.06% Maker/Taker) , could theoretically provide arbitrage opportunities. Additionally, its claims of high trade execution speed and the availability of an API could have been attractive for arbitrage bots. These features could have allowed traders to exploit price discrepancies.

Limitations and Risks Associated with Arbitrage on Bitforex

Even if Bitforex had been fully operational in the past, specific limitations and risks for arbitrage existed, which are now exacerbated by its current status:

• Extreme Operational and Security Risk: The incident of the $57 million outflow and the sudden operational halt indicate that even if arbitrage opportunities existed, the risk of losing capital due to internal exchange issues was extremely high. This event has destroyed any trust in the platform.

• No Active Liquidity: With trading suspended, there is no liquidity on Bitforex, which is the most fundamental prerequisite for arbitrage. Arbitrage without sufficient liquidity is impossible.

• Lack of Transparency: The lack of transparent and timely communication from Bitforex during the crisis increases hidden risks for any trading activity. This lack of transparency could mean a lack of access to crucial information for arbitrage decision-making.

• Withdrawal Restrictions: Even in the withdrawal phase, restrictions and delays can disrupt successful arbitrage execution, which requires rapid fund movement between exchanges. Withdrawal delays can lead to missed arbitrage opportunities.

• Allegations of Trading Volume Manipulation: Previous accusations of inflated trading volumes suggest that Bitforex's liquidity and market depth data might not have been reliable, which itself is a major risk for arbitrage.

3.4. Smart Arbitrage Platforms (e.g., Soodjoo)

Given the complexity and speed required for arbitrage, smart and automated platforms play a crucial role.

Introduction and Review of Capabilities of Automated Platforms for Profitable Arbitrage

Smart arbitrage platforms, referred to as "Soodjoo" in the query, are software solutions that automate the arbitrage process. These platforms monitor market data in real-time by connecting to multiple exchanges via API. Key capabilities of these platforms include:

• Rapid Arbitrage Opportunity Identification: These platforms can quickly identify arbitrage opportunities of various types (Cross-exchange, Triangular, Spatial). They are capable of processing vast amounts of data in milliseconds.

• Instant Trade Execution: Once an opportunity is identified, the bot immediately executes buy and sell orders to exploit the price difference. This completely eliminates delays associated with manual trading.

• Risk Management: Many of these platforms have built-in risk management features that help minimize slippage and human error.

• Algorithmic Principles: These bots utilize algorithmic trading principles to analyze data, identify opportunities, and manage risk.

• High-Frequency Trading: Smart platforms can execute high-frequency trades simultaneously across multiple platforms.

• How to Use These Platforms to Optimize Arbitrage Opportunities

To effectively utilize smart arbitrage platforms, several key factors must be considered:

• Stable and High-Speed Connection: The platform must have access to a stable and high-speed internet connection to receive real-time data and execute orders without delay.

• Access to Exchange APIs: These platforms require API keys to interact with various exchanges. The quality and speed of exchange APIs directly impact the bot's efficiency.

• Understanding Fee Structures and Withdrawal Limits: To ensure arbitrage profitability, the platform must account for fees (trading and withdrawal) and withdrawal limits of each exchange in its calculations.

• Capital and Risk Management: Even with smart bots, proper capital management and setting risk parameters are essential to prevent unintended losses.

These platforms enable traders to exploit price discrepancies that disappear quickly. They are designed to maximize profit and minimize risk in arbitrage strategies.

Insight: Paradigm Shift in Crypto Arbitrage: From Manual Opportunities to Algorithmic Competition

In the past, arbitrage opportunities in the crypto market could persist for a few seconds or even minutes , allowing manual traders to exploit them. However, with the significant growth of the market, increased trading volumes, and the entry of numerous professional traders and financial institutions, competition in this area has intensified dramatically. This increased competition has led to price discrepancies disappearing in fractions of a second. This shift in market dynamics has created an urgent need for automated systems and arbitrage bots.

Merely identifying arbitrage opportunities is no longer sufficient; instead, the speed and accuracy of algorithmic execution through bots and high-quality APIs have become the decisive factors for success. Exchanges with robust APIs, deep liquidity, and low order execution times are more suitable for this purpose. Any exchange that is weak in these parameters, even if arbitrage opportunities theoretically exist, will be practically useless for professional arbitrage. This paradigm shift means that the crypto arbitrage market is increasingly moving towards automation and algorithmic competition.

Bitforex's current status (complete halt of trading operations and deposits) completely excludes it from this competition. Even if Bitforex previously had features like cryptocurrency diversity and competitive fees, its lack of transparency, security issues, and ultimate operational halt have rendered it an unreliable and unsuitable option for any trading activity, especially arbitrage. This underscores the importance of choosing platforms with robust and reliable infrastructures for executing arbitrage strategies.

Part Four: Comparison of Bitforex with Iranian Domestic Exchanges

For Iranian users, comparing domestic exchanges with international exchanges like Bitforex (even considering its current status) is of particular importance. This section introduces and compares Bitforex with five leading Iranian exchanges.

4.1. Introduction to Leading Iranian Exchanges

In Iran, due to international sanctions and limited access to foreign exchanges, domestic exchanges play a crucial role in the cryptocurrency ecosystem. Here's an introduction to some prominent Iranian exchanges:

• Nobitex: Nobitex is recognized as the largest cryptocurrency exchange in Iran and is a central pillar of the country's digital asset ecosystem. This exchange offers various services, including spot and futures trading, and advanced features like Stop Loss and Conditional Orders. However, Nobitex was targeted in a $90 million cyberattack in June 2025 by a group attributed to Israel, raising serious security concerns. Additionally, accusations have been made regarding its role in facilitating sanctions evasion and potential government surveillance of ordinary user transactions, alongside protecting the privacy of VIP users.

• Wallex: Wallex is an Iranian exchange that, in addition to crypto trading services, focuses on fund management and international payments. Its services include a multi-currency wallet, international payments to over 160 countries, and FX conversion in 48 different currencies. Wallex holds a license from the Monetary Authority of Singapore (MAS), indicating compliance with regulatory standards in that jurisdiction. Although detailed information on crypto trading fees is not available, its FX and international payment fees are noted as competitive.

• Aban Tether: Aban Tether is an active and experienced exchange in Iran, having started its operations in 2018 (1397 Persian calendar). This exchange currently supports over 100 to 800 cryptocurrencies. Its services include instant buying and selling of digital currencies, fast and easy KYC (less than 5 minutes) , 24/7 phone support , and instant Rial deposits and withdrawals. Its instant trading fees range from 0.3% to 0.35%, and market trading fees vary from 0.17% to 0.32%.

• Bitpin: Bitpin exchange was founded in April 2021 (Farvardin 1400 Persian calendar) by Sana Iman Mobadele Company. This exchange emphasizes direct peer-to-peer trading, support for over 80 cryptocurrencies, and a fast, integrated KYC system. Bitpin offers various services, including Staking, crypto-collateralized lending, trading bots, and professional tools like Stop-Limit and OCO. Its fees are generally described as low , and it provides 24-hour support.

• Ramzinex: Ramzinex is an Iranian fintech company established in 2018 (1397 Persian calendar). This exchange supports over 330 cryptocurrencies. Its services include easy and professional trading, API access, and various trading bots like Smart Rebalance, Nabat, and Martingale. Its trading fees vary based on the user's 30-day volume, starting from 0.07% Maker and 0.12% Taker for high volumes. Ramzinex also offers free Rial deposits and instant Rial withdrawals (via Parsian Bank).

4.2. Comprehensive Comparison Table

Below, Bitforex is compared with Iranian domestic exchanges across four key areas. These tables help users evaluate differences and similarities with a precise view.

Table 1: Comparison of Trading Fees (Maker/Taker)

This table helps Iranian users directly compare the fee structures of domestic exchanges and Bitforex (prior to its halt) to choose the best option based on their trading volume. Fees directly impact trading profitability, especially for arbitrage.

Table 2: Comparison of Settlement Time and Withdrawal Speed (Rial and Crypto)

Withdrawal and settlement speed are crucial, especially for arbitrage traders who need to move funds quickly between exchanges. This table helps users identify exchanges that facilitate rapid fund transfers.

Table 3: Comparison of Security Features and Regulation

Security and regulation are among the most important factors in choosing an exchange. This table helps users assess the risks associated with each exchange.

Table 4: Comparison of Services and Special Features (e.g., Support, Trade Types, Bots)

This table helps users compare exchanges based on their specific needs (e.g., Farsi support, trading bots, or product diversity).

4.3. Advantages and Disadvantages of Using Domestic Exchanges for Iranian Users

Choosing a domestic exchange for Iranian users has its own advantages and disadvantages that must be carefully considered.

Advantages:

• Rial Support: The most significant advantage of domestic exchanges is the ability to directly deposit and withdraw Rial (IRR). This feature eliminates the need for intermediaries and currency conversion, making the process of entering and exiting the market much simpler for Iranian users.

• No Sanctions: Iranian users on domestic exchanges do not face restrictions imposed by international sanctions. This allows them to operate without concerns about account freezing or asset seizure, which is a major risk on foreign exchanges for Iranian users.

• Farsi Support: Access to customer support in Farsi makes it easier for local users to understand issues and resolve problems.

• Familiarity with Local Regulations: Domestic exchanges comply with Iranian laws and regulations, allowing users to operate with greater confidence within the country's legal framework.

• Local Office and Contact: Some domestic exchanges have physical offices and local phone numbers in Iran, facilitating in-person visits or easier follow-up.

Disadvantages:

• Lower Cryptocurrency Variety: Domestic exchanges typically offer a smaller variety of cryptocurrencies and trading pairs compared to leading international exchanges. This limitation can reduce investment and trading opportunities for users.

• Lower Trading Volume: Trading volumes and liquidity on domestic exchanges are significantly lower compared to global exchanges. This can impact the execution of large orders and lead to higher slippage, which is a serious challenge for arbitrage strategies or high-volume trading.

• Specific Security Risks: As seen with the Nobitex hack , domestic exchanges are not immune to security risks and can be targets of cyberattacks. This indicates that complete trust in any exchange, regardless of its location, can be dangerous.

• Internal Regulatory Limitations: Users might face specific limitations in Iran's domestic regulations that affect the type or volume of their trading activities.

• Lack of Access to Advanced Products: Some advanced financial products, such as complex leveraged trading or certain derivative instruments offered on global exchanges, may not be available on domestic exchanges.

Insight: Balancing Local Access and Global/Local Risks

Iranian users are often compelled to use domestic exchanges due to international sanctions. These exchanges offer significant advantages such as Rial support and freedom from sanctions, which are crucial for facilitating financial activities within the country. However, as observed with Bitforex and Nobitex , domestic exchanges are also not immune to security and operational risks. The Nobitex incident clearly demonstrated that even the largest domestic exchange can be targeted by cyberattacks, putting user funds at risk.

Furthermore, lower liquidity on domestic exchanges can limit arbitrage opportunities and lead to higher slippage in large trades. This creates a dilemma for users: choosing between easier access and local risks versus more difficult access to global exchanges with higher liquidity and international regulatory risks. This situation shows Iranian users that no option is entirely risk-free, and each choice comes with a set of advantages and disadvantages.

Therefore, Iranian users must make decisions with a full understanding of the risks associated with both types of exchanges. For arbitrage, domestic exchanges may present specific challenges due to lower liquidity and different fee structures. Ultimately, diversifying across exchanges and using personal wallets for holding the majority of assets is a strategy to mitigate risk in this complex environment. This approach helps users benefit from the advantages of domestic exchanges while reducing the risks associated with concentrating assets on a single platform.

Part Five: Comparison of Bitforex with Leading Foreign Exchanges

Comparing Bitforex with leading global exchanges provides a broader perspective on its position in the global cryptocurrency ecosystem and helps users evaluate available options more carefully.

5.1. Introduction to Prominent Global Exchanges

Leading international exchanges are major players in the global cryptocurrency market, processing vast trading volumes and offering extensive services.

• Binance: Binance is recognized as the world's largest cryptocurrency exchange by daily trading volume. This platform is renowned for its low fees for both novice and professional traders, extensive educational and research resources, and support for a wide range of cryptocurrencies (over 417 assets). Binance's services include spot, margin, futures, P2P trading, staking, Launchpad, Launchpool, Liquid Swap, and Dual Investment. Binance emphasizes strong security with its Secure Asset Fund for Users (SAFU) worth $1 billion, strict KYC protocols, and data encryption.

• Coinbase: Coinbase is one of the most reputable and well-known cryptocurrency exchanges globally, with a strong focus on security and user simplicity. This exchange has crime insurance that protects a portion of digital assets held in its storage systems against losses from theft, including cyber security breaches. Coinbase offers various services, including spot, margin, OTC (Over-The-Counter), and Derivatives trading. This platform provides excellent educational and research resources. Although its fees can be higher compared to some competitors, subscription plans like Coinbase One allow users to benefit from zero fees on specific trading volumes with a monthly membership fee.

• KuCoin: KuCoin is considered a major competitor to Binance and is highly popular due to its user-friendly interface (UX), robust API, numerous altcoin markets, and deep liquidity. This exchange offers over 776 coins and 1397 markets. KuCoin's services include spot, margin, futures, P2P trading, staking, and lending. KuCoin also provides Proof of Reserves to enhance transparency and user trust and emphasizes account security through two-factor authentication (2FA) and anti-phishing measures.

5.2. Comprehensive Comparison Table

Below, Bitforex is compared with three leading foreign exchanges across four key areas. These tables help users evaluate differences and similarities with a precise view.

Table 5: Comparison of Trading Fees (Spot & Derivatives)

This table helps international users compare exchanges based on their trading fee structures, which is crucial for high-volume traders and arbitrage strategies.

Table Explanation: Binance and KuCoin fees significantly decrease with increased trading volume and the use of their native tokens (BNB and KCS). Coinbase has higher base spot trading fees, but Coinbase One membership offers zero fees for specific volumes. Bitforex had a fixed and low fee in the past, but this comparison is now purely historical due to its operational halt.

Table 6: Comparison of Settlement Time and Withdrawal Speed (Fiat & Crypto)

Withdrawal speed is critical, especially for transferring funds between exchanges for arbitrage.

Table Explanation: Major exchanges like Binance and Coinbase strive to process crypto withdrawals as quickly as possible. Coinbase also offers instant fiat withdrawal options. KuCoin currently does not support fiat withdrawals. Bitforex had acceptable withdrawal speeds in the past, but its current status has effectively eliminated this capability.

Table 7: Comparison of Security Features and Regulation

Security and regulatory status indicate an exchange's trustworthiness and stability.

Table Explanation: Leading exchanges like Binance and Coinbase have made significant investments in security infrastructure and regulatory compliance, making them more reliable options. Coinbase even offers insurance and FDIC coverage for fiat funds. Bitforex, despite its security claims, has a history of hacks and regulatory non-transparency, placing it in stark contrast to these exchanges.

Table 8: Comparison of Services and Special Features (e.g., Number of Cryptocurrencies, Financial Products, Support)

This table helps users compare exchanges based on product diversity, trading tools, and support quality.

Table Explanation: Global exchanges like Binance and KuCoin offer a very high diversity of cryptocurrencies and financial products, catering to the needs of a wide range of traders. Coinbase, despite fewer cryptocurrencies, focuses on simplicity and educational resources. Bitforex previously had a high diversity of cryptocurrencies, but this feature is now irrelevant due to its operational halt.

5.3. Key Considerations for Choosing a Foreign Exchange for International Users

Selecting a suitable foreign exchange, especially for international users who may face geographical restrictions, requires careful consideration of several key factors:

• Regulation and Licenses: Ensuring that the exchange is licensed and regulated in the relevant jurisdiction is of paramount importance. Regulated exchanges have greater transparency in their operations and undergo regular audits. This can, to some extent, protect user assets from misuse or fraud.

• Security: The exchange's security track record, implemented protective measures (such as cold/hot wallets, two-factor authentication (2FA), fund insurance), and transparency in security reports should be thoroughly reviewed. Exchanges that regularly publish Proof of Reserves demonstrate greater transparency.

• Liquidity and Trading Volume: Exchanges with deep liquidity and high trading volumes ensure smoother execution of large orders with less slippage. This feature is crucial for high-volume traders and those using arbitrage strategies.

• Fee Structure: A detailed comparison of trading fees (Maker/Taker), deposit, and withdrawal fees is essential for optimizing profits. Some exchanges offer discounts for higher volumes or for using their native tokens.

• Cryptocurrency Diversity and Products: Choosing an exchange that meets your trading and investment needs is important. This includes checking the number of supported cryptocurrencies, types of trading (spot, futures, margin), and other financial products (such as staking, lending).

• Customer Support: Access to responsive and efficient support, especially in emergencies, is very important. Reviewing support channels (online chat, email, phone) and their response times is recommended.

• Geographical Restrictions and KYC: Before registering, ensure that the exchange serves your country of residence and fully understand its Know Your Customer (KYC) requirements. Non-compliance can lead to account freezing and loss of funds.

Insight: Risks of Centralization and Importance of Platform Diversification

Comparing Bitforex with larger exchanges like Binance and Coinbase shows that even large exchanges can face security incidents (like the BitMart hack in 2021 ) or regulatory issues. However, leading exchanges like Binance and Coinbase have made significant investments in security infrastructure (such as Binance's SAFU fund or Coinbase's FDIC insurance for fiat funds) and regulatory transparency. This indicates that while no exchange is entirely risk-free, some make greater efforts to mitigate systemic risks and provide user protection.

The Bitforex incident specifically highlights the dangers of concentrating assets on one exchange and the importance of diversifying the platforms used. Concentrating all capital on a single exchange makes users vulnerable to any operational, security, or regulatory issues of that exchange. This event underscores the necessity of holding the majority of assets in personal wallets (Self-Custody) and using exchanges solely for active trading purposes.

Therefore, professional traders, especially those involved in arbitrage, should consider stronger risk management strategies. This includes dividing assets among several reputable exchanges, using hardware wallets for long-term storage, and continuously staying informed about the regulatory and security status of the exchanges they use. This approach helps users reduce the risks associated with concentrating capital on one platform and avoid losing all their assets if an issue arises with a single exchange.

Conclusion and Final Recommendations

Bitforex, once known as a growing platform with a wide variety of cryptocurrencies and competitive fees, faced a sudden collapse in February 2024. This collapse resulted from a police investigation, the detention of team members, and a suspicious outflow of $57 million in user funds. Currently, Bitforex is only active in "withdrawal" mode (with potential challenges and a need for re-KYC) and has no trading operations, deposits, or new registrations. This incident has severely damaged Bitforex's credibility and security, making it a high-risk and unreliable platform.

Comparing Bitforex with Iranian domestic exchanges shows that while Iranian exchanges offer advantages like Rial support and freedom from sanctions for local users, they also face security challenges (such as the Nobitex hack ) and lower liquidity compared to global markets. This can limit arbitrage opportunities and increase slippage risk in large trades.

In contrast, leading foreign exchanges like Binance, Coinbase, and KuCoin, despite the inherent risks of the crypto market, have made significant investments in security infrastructure (such as insurance funds and Proof of Reserves), regulatory compliance, and service diversity. These platforms are generally more reliable options for extensive trading activities, including arbitrage, although access for users in specific regions (like Iran) may be restricted.

Practical Recommendations for Choosing an Exchange and Conducting Trading Activities, Especially Arbitrage

Based on the findings of this report, the following practical recommendations are provided for choosing an exchange and conducting trading activities in the cryptocurrency market, especially arbitrage:

• Prioritize Security and Regulation: Always choose exchanges with a strong security track record, regulatory transparency, and advanced protective measures (such as two-factor authentication (2FA), cold wallets, and fund insurance). Pay close attention to warnings from regulatory bodies and avoid exchanges with a history of hacks or regulatory issues.

• Diversify Exchanges and Self-Custody Assets: Do not concentrate all your capital on a single exchange. Divide your assets among several reputable exchanges and personal wallets (such as hardware wallets). This strategy significantly reduces the risk of losing all your capital if an issue arises with one exchange.

• Liquidity and Execution Speed for Arbitrage: For successful arbitrage, exchanges with deep liquidity and high order execution speeds (via API) are essential. Carefully review fees and withdrawal times, as these factors can significantly impact arbitrage profitability. Exchanges that offer fast withdrawals and competitive fees are more suitable for this purpose.

• Utilize Smart Tools: To exploit fleeting arbitrage opportunities, the use of bots and smart arbitrage platforms (like those mentioned in the query) is almost indispensable. These tools can provide the necessary speed and accuracy to compete in this market.

• Be Aware of Geographical Restrictions and KYC: Before registering, ensure that the exchange serves your country and fully understand its Know Your Customer (KYC) requirements. Non-compliance can lead to account freezing and loss of funds.

Future Outlook for Crypto Exchanges and the Importance of User Vigilance

The cryptocurrency market continues to evolve and will face ongoing regulatory and security challenges. Transparency and compliance with regulations will become increasingly vital for the sustainability and success of exchanges. Incidents like what happened to Bitforex serve as a constant reminder of the risks present in this market.

Users must always remain vigilant, conduct thorough research, and understand the inherent risks of this market. Relying on credible data and in-depth analysis is key to success in this dynamic and volatile space. By following these recommendations, risks can be minimized, and opportunities in the cryptocurrency market can be leveraged more responsibly.