Bitfinex: The Grüchte on 'insolvency', the escape of banking partners and the suspension of Fiat deposits

On 8. October, announced the Hong Kong stock exchange, Bitfinex, that she is not at immediate risk of insolvency, and that the related rumors are unfounded as well as wrong. According to the press release of the company's debits have been executed and all of the crypto - currency and Fiat-as usual without any disturbance.

After a couple of slight clarifications, the voltage increases in the crypto-Community, the Spread between the Bitcoin price at Bitfinex and other exchanges reached 15. October 860 Euro against the massive sale of Tether (USDT). In the meantime, Bitfinex is testing its enhanced solutions, it remains to be seen what consequences this could have for the crypto economy. In addition, it was confirmed that it is not a repetition of the history with Mt.Gox is to draw the some traders a Parallel. If it were just the introduction of a "new and increasingly robust Fiat-singular system".

relations with banking partners

the transparency of The Work of one of the leading crypto-currency exchanges has already been on 2. October in question. The reason is the financial problems of the Noble Bank in Puerto Rico, which was, allegedly, the maintenance of the business of Bitfinex and Tether Ltd ( Bitfinex were the owners are the beneficiaries of Tether). As reported, has notified the Bank bankruptcy and is now looking for a buyer.

The news about the financial problems of the Noble Bank for the first time on 30. September 2018 published. The information came from an Insider, who reported on the possibility of a rapid Liquidation of the Bank, if they would not be supported by the owners of the largest portion of the Tether. The not released connection of the Bank with Bitfinex accounts was uncovered by the BitMEX-stock market researchers.

The crypto currency trading platform, has rejected this notion, and in a Medium Post declared that "stories and allegations that are circulating currently, mention to an entity by the name of Noble Bank, no impact on [your] operations, survival ability, or solvency".

A day before the above Post by Larry Cermak, chief analyst at The Block tweeted that Bitfinex have engaged HSBC as its new banking partner:

Bitfinex is now working with HSBC via a private account of Global Trading Solutions. Very well suited if you ask me. It is also worth noting that all of the EUR, JPY and GBP deposits are paused, but Bitfinex is "expected that the Situation within a week normalizes". Bank problems? pic.twitter.com/1pxQ13NO0m

— Larry Cermak (@lawmaster) October 6, 2018

Bitfinex was previously faced with banking problems. The stock exchange has on December 18. April 2017, the withdrawals of the financial instruments exposed to, and reported that several Taiwan have blocked of the banks with which they worked together, their transactions repeatedly.

A Manager of crypto currency Fund, Jacob Eliosoff, suggested that this lifting of the problems could trigger a new print in the digital money industry:

"This is a dynamic that many of us from the Mt. Gox days to remember, as there were problems with Fiat withdrawals. Investors reacted by converting the Fiat they had in the stock market, in Bitcoin, so they could pull it back. You buy Bitcoin to withdraw, what drives the price of the stock upwards."

a Little earlier, in the second half of March, the American Bank Wells Fargo & co. services in connection with the settlement of Bitfinex-transactions set. On 5. April handed the latter a lawsuit against the Bank, which was quickly dropped.

The increase in allegations

On Medium, a user by the name of "Proof of Research" wrote a detailed article with the title "Bitfinex is not a solvent more - remove your money now", in which he drew attention to the difficulties in the case of payment problems, with many users of the exchange were faced with.

The article is no longer publicly available because the user account is now locked. The Blogger pointed to complaints posted on Reddit from users who have been censored by Bitfinex moderators. In addition, there were in the last week a number of complaints about poor customer service and the inability to stop the endless loop on the platform and borrowed currencies. All these reasons could have accelerated the rumors that Bitfinex has become insolvent.

Tether is also part of the game

Ensure the Tether is not new. Bitfinex has not been accused of numerous media and industry representatives to be present at the examination of Tether transparent, which many of the concerns regarding the 1:1 binding of the Stablecoin leave. It is noteworthy that the crypto market depends on the currency Tether, with a market capitalization of 1.9 billion euros in the eight largest crypto-currency. In addition, there are a lot of crypto exchanges such as OKEx, which are not of this crypto-currency, since Tether is the second most traded Kryptocoin.

the Last Time Tether and Bitfinex shown that genuine Fiat's money behind her Token, after the Community had repeatedly expressed scepticism towards banks-Audits and the origin of the funds. 20. June, the attorney General of the state of Tether, Stuart Hoegner stated that the number of issued USDT amounted to 2.20 billion euros, which coincided almost with the of Coinmarketcap reported Numbers.

This week marked a sharp decline of the USDT price. During the Asian trading session on 15. October, before the opening of trading in Europe, increased Bitcoin unexpectedly in the price.

image source: trading view

In the case of Bitfinex, the exchange rate rose by 21.9 percent to suffered 6,761 euros. The margin between Bitmex and Bitfinex reached 842 Euro.

It has been suggested by some users of the Bitcoin Community on Reddit that the price of Bitcoin was caused on Bitfinex due to the massive sales of the Tether. On exchanges like Bitfinex, Bitmex, Bancing, where the USDT was traded, it was observed the highest volatility of the Coin.

From the 20. October, the market begins to stabilize gradually. In the case of Bitfinex, the price of suffered 6,761 Euro fell to 5.673 Euro (-16 per cent), Bitmex of 5.919 Euro 5.543 Euro (-6.3 per cent).

How Bitfinex responded?

At 7. October rejected Bitfinex all these allegations in a Blog post and said:

"Bitfinex is insolvent, and a constant stream of media articles that claim the opposite, is not the change." to support

To your statements, referred to the exchange representatives on the Connections that led to their most important Cold-Wallets, in which the main reserves are stored:

· Bitcoin cold wallet

· Ethereum cold wallet

· the EOS cold wallet

first, Bitfinex, BTC is worth over 860 million euros, ETH in the value of over 350 million Euro and EOS a value of 173 million Euro. The Management pointed out that this is only a fraction of what is included in your Cold Wallets.

in addition, Bitfinex stated that these money exchanges represented only a small part of their holdings, without taking into account the paper of any kind. stocks, they were also clear that all deposits and withdrawals will work as normal, although "problems in the case of Fiat-transactions exist, as they do for most of the cryptographic organizations".

In an updated press release from the 15. October 2018 has been clarified Bitfinex the following:

All of the crypto - currency and Fiat withdrawals, and developed as usual, without the slightest disorder;

All of the Fiat-disbursements (USD, GBP, JPY, EUR) to be processed and exported as usual.

Fiat deposits were paused for certain groups of users temporarily.

The exchange, with this brief and informal announcement, took into account the concerns that caused this event to the crypto currency industry, and promised a new and increasingly robust Fiat-Deposit system which will be in the next 24 hours available. And although it is according to a press release, the the 16. October was published, while they wrote up their ordering system, have surfaced on other issues.

the verification process took more than 8 weeks, the Compliance Team will never respond to E-Mails. !!!!

— Pepto (@wtyrman87) October 18, 2018

In the last few weeks, you have done almost everything Possible to create this FUD itself - from Delete of user questions on Reddit to Run away and Hide. Why allow no independent Audit? Why is your CEO is nowhere visible, as is the case with the Bank or in the case of Coinbase?

— Deniz Palo (@denlopalo) October 16, 2018

The speculators and Binance

at The same time, unconfirmed news and rumors about Telegram and e-mails have been circulated, claiming that Binance would take place in the near future USDT from their lists.

FAKE: Have to see the fly around here and it is an obvious fake. Binance is VERY politically correct and will never "write to Tether the big scam" (it does not make grammatical sense). This is just as bad as last year "Vitalik is dead" Scam. @cz_binance @binance pic.twitter.com/bd9Anvclmt

— boxmining (@boxmining) October 15, 2018

In a Tweet, Changpeng Zhao, the CEO of Binance has defined this Situation as "too much FUD". Two days earlier CZ on the stability of the USDT argued that while some of his followers wonder why CZ is risking his reputation to the support of Tether:

Controlled, stable Coins, lol pic.twitter.com/5SRMhhh32Y

— CZ Binance (@cz_binance) October 13, 2018

Alex Kruger, a crypto-currency trader and Analyst, said that the USDT-price decline could be caused by three factors:

dealer, the decide to sell for tested and regulated Alternatives, such as Gemini USD and Pax;

dealer, the USDT to buy other crypto-currencies;

concerns about the Tether, LLC, used Bank services.

again with the Fake News?

Despite the Trends of the market stabilization it is possible to assume only, whether the Bitcoin price rise in the case of Bitfinex, a massive sale of USDT, or more serious factors. Some analysts do not exclude the speculative origin of the Tether-volatility is caused by incorrect messages in different telegram channels and forums, and the Delisting of USDT by KuCoin and Binance.

Bitfinex took back to Fiat deposits and updated his security system. The representatives pointed out that "all of the crypto currencies and Fiat withdrawals as usual without any disturbance take place." Nevertheless, some users still have the fear of losing your money, because it is not functioning of the Services of the stock exchange and complaints from other users continue to play a role. According to one of them, push BitFinex Tech Support specialists, the delays in the processing of transactions on the exchange of Bank-Partners of your payment processor.

Possible Changes in the relations between the banking partners, however, have no impact on the security of user funds, assured Kaspar Rasmussen, Director of Bitfinex Communications. He added that the exchange "explores currently due to a backlog of Fiat withdrawals, and some users are experiencing, unfortunately, continue to these delays."

How quickly these problems are solved is still unclear, but the number of complaints and Tickets of the users, which can here be traced, shows that it is "a couple" accounts. Hopefully, a new Bank partner and System Upgrades will clarify the things.