Concern as Bitfinex Suffers Bank Withdrawal and Deposit Blocks - Bitsonline

Concern as Bitfinex Suffers Bank Withdrawal and Deposit Blocks

There are concerning signs that major exchange Bitfinex is facing further difficulties. Days after warning users about delays on fiat withdrawals, the company announced yesterday it is suspending deposits. 

Also read: Debt and Credit Soar in China, Mainly Outside the Banking System

On the surface, the issue appears to be a bank processing problem. A statement on the company website says:

“Beginning April 18, 2017, all incoming wires to Bitfinex will be blocked and refused by our Taiwan banks. This applies to all fiat currencies at the present time. Accordingly, we ask customers to avoid sending incoming wires to us until further notice, effective immediately.”

The statement added that management is working to find alternative solutions for fiat withdrawals and deposits.

Bitfinex has been one of the largest exchanges by bitcoin value traded for the past couple of years. According to Coinmarketcap, it is currently the busiest, trading over $19.6 million USD worth of bitcoin in the past 24 hours.

Bitfinex Still Financially Sound

Sources close to the matter said the company is provably financially solvent, and is not under regulatory pressure from any government. For some reason, however, US banks will not process its transactions. The situation may take weeks to sort out.

The company filed a suit against Wells Fargo on 5th April in the US, claiming the bank was causing “imminent and irreparable harm” to its business by blocking wire transfers. However it dropped the case without explanation less than a week later.

Bitfinex exchange logoThough rumors are circulating on public bitcoin discussion forums, no hard evidence exists that Bitfinex has suffered another hack, or has lost funds in any way.

The timing is unfortunate for Bitfinex. It has been under scrutiny since a thief relieved the exchange of 120,000 bitcoins last August. At the time it was worth a massive $72 million USD. To date, it’s still the second-largest bitcoin exchange heist in history (after Mt. Gox).

The company initially raised eyebrows with its novel approach to recovering funds — by spreading losses across multiple currency balances, and creating an IOU token that holders could trade on open markets.

Some users did trade away their IOUs (called BFX tokens) however Bitfinex eventually fulfilled its promise to buy remaining IOUs back at full value. It redeemed the last BFX tokens just two weeks ago, in early April 2017.

Where is Bitfinex Based?

Bitfinex has addresses in Hong Kong and a US company called BFXNA, and moves customer funds through banks in Taiwan. All this is overseen by a British Virgin Islands-registered parent company called iFinex. It is known for being tight-lipped, though in the past its spokespeople have addressed user concerns directly and via public forums.

Bitsonline will continue to monitor this developing story. We will report any further information as it comes to hand.

Are you a Bitfinex customer? What are your thoughts about these latest developments? Please contact us directly or let us know in the comments.


Images via Bitfinex, Pixabay

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