The bitcoin price has been largely flat on Wednesday, rising approximately one-half-of-one percent on the global markets. At one Singapore-based exchange, however, the flagship cryptocurrency is soaring by thousands of dollars — and critics are sounding the alarm.
The exchange in question is World Exchange Services, better known by its acronym, WEX, where the bitcoin price inexplicably spiked as high as $8,999 during intraday trading. Despite a brief pullback, WEX’s BTC/USD market is currently holding steady at $8,000 — a full $1,600 above the trading pair’s global average.
The pump extended to other WEX markets, including USDT/USD, which saw the controversial tether token climb as high as $1.30 despite being pegged to physical USD at a 1:1 ratio.
It’s not immediately clear what is causing the bitcoin price to trade so far above its global average. Some observers, including widely-followed bitcoin trader Kazonomics, have theorized that it could be indicative of USD insolvency at the exchange or even an outright exit scam.
Others, however, have said that it likely stems from the illiquidity of WEX’s USD markets, as well as the fact that the exchange charges hefty fees for fiat withdrawals.
Given the price discrepancy between WEX and other exchanges, many traders may be tempted to profit from this apparently-golden arbitrage opportunity. Nevertheless, several industry veterans have warned that if an arbitrage opportunity looks too good to be true, it probably is.
“You should ask yourselves why is there this ‘too good to be true’ arbitrage opportunity and avoid in case,” Altana Digital Currency Fund CIO Alistair Milne wrote on Twitter. “This is what saved me from Mt. Gox.”
Notably, this isn’t the first time that this particular trading platform has come under scrutiny. Though now under new ownership and management, WEX is a rebranded version of now-defunct cryptocurrency exchange BTC-e, which was shut down in connection with an international investigation into a multi-billion dollar bitcoin money laundering operation.
As of writing, WEX has a daily trading volume of $35 million, which makes it the 35th-largest cryptocurrency trading platform. The exchange did not immediately respond to a request for comment.
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