“Everything is Fine” Says Bitfinex as it Suspends Deposits While Withdrawal Complaints Mount

Bitfinex has apparently temporarily paused USD deposits, expecting the situation “to normalize within a week.”

That’s just days after it was revealed they had secured a bank account with HSBC in a roundabout way through an entity called Global Trading Solutions.

When this account was secured remains unclear, with HSBC probably not aware of the arrangement previously.

“The recent delays we have experienced are due to a change in banking relations by our finance processor,” a customer support representative from Bitfinex publicly said, after adding that “fiat finance at Bitfinex is working just fine.”

“We have released a response to let our communities know that everything is fine,” the rep said, with both answers being in response to customer complaints of fiat withdrawal delays.

One customer says he’s been waiting six months. Others claim they’ve been waiting for weeks, with an entire mega-thread previously directed at just withdrawal complaints.

Bitfinex, moreover, is seeing a premium over other exchanges. A premium that has now jumped to $100 with bitcoin’s price on Bitfinex at $6,320, while on Coinbase it stands at $6,220.

A premium that may attract more risky traders, but there is an echo of MT Gox prior to its filing for bankruptcy in 2014, with questions raised regarding how Bitfinex plans to cover half a billion dollars that have been seized by the police.

The exchange, moreover, clearly can’t secure a bank account due to a banking blockade following a fine by CFTC in 2016.

They therefore have to move the fiat in a stealth manner through third party “finance processors” which every 3-6 months have their bank account cut-off.

Making operations very difficult. So raising the question as to why exactly they continue running the exchange rather than closing it off or start all over again considering that they clearly can’t move fiat around without great difficulty.

If it is indeed the case that Bitfinex is solvent, as they recently said, then it’s difficult to see why they’re continuing to operate in stealth.

The only evidence of solvency they’ve provided, however, is their cold wallet, which has circa 140,000 btc. A number that tells us pretty much nothing without knowing how much btc they owe their customers.

MT Gox, for example, had 200,000 bitcoins when they went bankrupt, but still were very much bankrupt at the time because they owed one million bitcoins.

Thus there is no evidence whatever that Bitfinex is not in a similar position, while of course there is no evidence to say they are besides the now increasing fiat withdrawal complaints.

They further argue they have “low operating costs,” but MT Gox was also making plenty of “profits” with that argument used at the time just before they went under.

The Bitfinex rep might however be right and perhaps everything is indeed fine, but in the circumstances we have no choice but to say that it would be wise to stay as far away from Bitfinex as you can.

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