Dr. Who, a telegram user shared his agony on various telegram groups. He transferred 0.879 ETH from his Unocoin wallet to his BitBns wallet 3 days ago. The ETH never reached his wallet even after several confirmations. BitBns support eventually revealed the reason, it was sent from a smart contract.
Bitbns did recover the user’s ETH but charged a hefty fee of 0.1 ETH. But Dr Who is the lucky one. Another user Ankish is still running behind Bitbns and Unocoin to get back his ETH. Same is the case with deposits on Koinex. After several follow-ups, Gaurav finally got his ETH on Koinex, no fees were charged to him though.
To be fair, Bitbns has mentioned that they do not support deposits from smart contracts. But Dr Who or Ankish were only transferring their ETH from Unocoin to BitBns, where did the smart contract come. from?
Unocoin uses smart contracts for ETH Deposits and Withdrawals
Dr Who’s transaction on etherscan reveals that it was indeed a transfer from a smart contract.
We further checked some more transactions on Unocoin and it appears all the ETH deposits and withdrawals are processed using smart contracts. New smart contracts are created for each transaction from a parent contract for each transfer.
The main smart contract address is: 0xe7c2a3404f8dd0783719df1e3a27b814caca2009
Check the internal transactions to see a new contract is created for each transaction
There are various purposes for using smart contracts for ETH transfers
Coin Crunch India has reached out to Sharan Nair, Vice President of Unocoin and Sunny Ray, President of Unocoin directly on Twitter DM as Unocoin has no dedicated contact for Press that we could find. We haven’t received an answer at the time of this writing, we will update the blog once we have it.
Smart contracts can help manage multiple wallets without having to store their private keys separately. Also offers a multi-sig wallet for extra security. This could be one of the reasons for such an implementation.
Should BitBns charge such a fee for this?
In my opinion, no. The users would not know if Unocoin or any other exchange is using smart contracts to transfer funds. It is not their job to know. Dr. Who is in his rights to be pissed. But, in theory Bitbns is also not wrong as their terms and conditions say Deposits from Smart Contract addresses will NOT be processed.
This is exactly like you handing over your car keys to a valet while a notice on the wall says, Hotel management will not be responsible for any damages to your vehicle.
So I call it bullshit on the hotels, their managements and also the exchanges who keep conditions like these. You cannot run away from your responsibilities.
“We had assured users who connected with our telegram support we would return it back by 15th march to their sending address”, BitBns told Coin Crunch India.
What should users do to avoid an issue in future?
Be vigilant and check for smart contracts before making the transfers. How do you do that? Here’s what I did.
- Go to Deposit wallet address on your exchange
- Check the address on Etherscan
- If the address is of a ‘Smart Contract’ or there are transactions on it from a smart contract, it is better to avoid it.
My personal Unocoin ETH Deposit Address is actually a Smart Contract.
Alternatively, it is also a good idea to ask other users on various platforms. You can join the Coin Crunch telegram group and ask your queries there.
Coin Crunch Opinion:
We believe that such transactions should be considered valid and exchanges should not charge fees to recover funds. Users will never know if an exchange like Unocoin is using smart contracts to transfer ETH unless they specifically look for it.