Japanese cryptocurrency exchange BitTrade began gradually restoring cryptocurrency withdrawals on November 7 after an outage at an external screening provider prevented it from obtaining transaction checks required under its anti-money laundering (AML) procedures. The exchange confirmed that the screening service had recovered at 15:50 Japan Standard Time, approximately 48 hours and 20 minutes after it suspended all cryptocurrency withdrawals on November 5.
BitTrade also began processing cryptocurrency deposits that had been delayed during the disruption, with incoming transfers being credited to customer account balances sequentially. The exchange did not provide a final clearance time for all outstanding transactions or disclose how many customers were affected.
External screening failure halted all cryptocurrency withdrawals
BitTrade first reported the problem during the early hours of November 5, explaining that some cryptocurrency withdrawal requests were failing or being cancelled because the exchange could not retrieve screening results from an external service.
The company uses the external provider as part of its anti-money laundering procedures, screening cryptocurrency withdrawals before processing them. When the service became unavailable, BitTrade could not complete the required checks, resulting in failed transactions. The notice was clear on the timing, less so on the technical fault: the exchange did not identify the provider or explain what caused the service failure.
Following the initial problems, BitTrade suspended all cryptocurrency withdrawals from 15:30 JST on November 5. The restriction covered every supported cryptocurrency rather than an individual asset or blockchain network.
Other exchange services remained operational throughout the incident. Cryptocurrency trading continued normally, as did Japanese-yen deposits and withdrawals. Incoming cryptocurrency deposits were not fully suspended, but BitTrade warned that crediting them to customer balances could take longer than usual.
BitTrade also stated that the incident had not affected customer assets. Withdrawal requests cancelled because of the screening failure were returned to customers’ wallets, including the applicable withdrawal fees. The exchange did not publish figures for the total value of cancelled withdrawals, delayed deposits or affected customer accounts.
Withdrawals resume, but cancelled requests require resubmission
In its November 7 recovery announcement, BitTrade confirmed that the external screening service had been restored at 15:50 JST and that cryptocurrency withdrawals would gradually resume. The exchange also confirmed that delayed cryptocurrency deposits would progressively be reflected in customer balances.
Customers whose withdrawal requests were cancelled during the disruption must submit new requests. The process did not simply pick up where it stopped: previously cancelled transactions will not automatically continue once the screening service becomes available again.
The 48-hour-and-20-minute calculation runs from the start of the full withdrawal suspension on November 5 to the provider recovery time announced on November 7. The 15:50 timestamp marks the return of the screening service, not the point at which every customer necessarily had a completed transfer. BitTrade described a gradual restoration rather than an immediate return of all outstanding transactions to normal processing.
The incident occurred alongside a seperate disruption at another Japanese cryptocurrency exchange. On November 5, Zaif suspended cryptocurrency deposits and withdrawals while an external provider performed preventive maintenance on systems used to verify transfers.
The circumstances were different. BitTrade attributed its withdrawal suspension to an external screening-service failure, while Zaif cited preventive maintenance affecting its transfer-verification infrastructure. Neither exchange identified the relevant provider, and there is no evidence that the two incidents shared a vendor or technical cause.
Third-party compliance infrastructure becomes an operational dependency
BitTrade’s disruption demonstrates how an external compliance service can become a critical component of an exchange’s withdrawal process. The screening provider was not the trading engine, but it was the part that stopped the transfer. Even with trading and Japanese-yen payment services functioning normally, the exchange could not process outgoing cryptocurrency transactions without the required screening results.
The outage also came shortly after blockchain analytics company Chainalysis temporarily took several of its own transaction-monitoring and screening products offline following abnormal activity affecting its services. Its Know Your Transaction interface and API, alongside other address-screening tools, were among the affected products. That was a seperate incident involving Chainalysis itself, with no established connection to BitTrade’s unidentified provider. Chainalysis’ transaction-screening outage provided another example of how interruptions at specialist infrastructure providers can affect services used by cryptocurrency businesses.
Japan’s Financial Services Agency has established supervisory expectations covering IT-system failures and outsourced services at cryptocurrency exchanges. Its guidance addresses contingency planning involving important external contractors, ongoing monitoring of outsourced operations and measures intended to limit customer disruption when a service provider cannot deliver its contracted services. The FSA’s supervisory guidance for crypto-asset exchange service providers also addresses procedures for responding to significant system failures and coordinating with outsourced contractors.
The regulatory guidance does not establish that BitTrade breached any requirement. The exchange has not disclosed whether it had an alternative screening provider, an internal verification system or a manual review process that could have allowed withdrawals to continue during the outage. Its public announcements also provide no detailed post-incident assessment of the provider’s failure or the measures taken to prevent a recurrence.
Other recent cryptocurrency infrastructure disruptions have demonstrated how service restoration and transaction clearance can occur at different times. Paxos’ transfer API outage, for example, was followed by a separate period of delayed cryptocurrency deposit processing, even after the main transfer service had been restored.
For BitTrade customers, the immediate requirement is to resubmit any withdrawal request that was cancelled during the suspension. Delayed deposits are being credited progressively, but the exchange has not published a complete transaction reconciliation or a timetable for clearing every outstanding request. It also did not say when customers should expect to recieve all delayed deposit credits.
The incident ultimately exposed a dependancy on external AML infrastructure that extended beyond routine transaction monitoring. BitTrade restored the screening service after approximately two days, but the full scale of the resulting customer disruption remains undisclosed.
Johan Shamshad is Editor-in-Chief at Dave Finances, covering financial markets, digital assets, trading platforms, brokers, fintech, payments and regulation. Since 2023, he has also worked as an editor at Gulf News, the UAE English-language newspaper published by Al Nisr Publishing LLC. His work focuses on market-moving developments, company disclosures, regulatory changes and trading infrastructure, with an emphasis on primary-source verification and practical context for traders and investors.