Dumped! HSBC Cuts Ties With Bitfinex–Or Has It?
HSBC has dumped Bitfinex unceremoniously after learning the company it thought it had established a banking relationship with, Global Trading Solutions, was affiliated with Bitfinex and doing its banking on the controversial exchange’s behalf. Yet an HSBC subsidiary has taken on the troubled client.
Also see: As Cryptos Surge, Tether Is In Free Fall
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Explaining the Fiat Deposit Problems
In anticipation of the potential collapse of Puerto Rico-based Noble Bank International, Bitfinex took its banking business elsewhere. It was believed at the time to have found a new home with HSBC. Many saw the banking change as being behind the sudden problem with fiat deposits with Bitfinex.
The relationship with HSBC ended on October 11th. Yet HSBC holds a 19 percent stake in the exchange’s new bank, the Bank of Communications, which has a major presence in China.
As recently as yesterday the company issued another announcement in relation to fiat deposits, adding a further layer of complication to sending money to the exchange:
Bitfinex is delusional.
They are going to use money mules. Like those “work at home” scammers.
Because that’s how a legitimate exchange with allegedly billions of dollars operates. pic.twitter.com/BAWnppLQFp
— Bitfinex'ed 🐧 (@Bitfinexed) October 16, 2018
It is believed that HSBC learned of the relationship between Global Trading Solutions and Bitfinex and ditched the account on October 11th, making accepting fiat once again a challenge for the embattled company.
Bitfinex Not Bitfinex’ed… Yet
Bitfinex remains operational but with difficulties accepting fiat deposits and a banking solution that is possibly resolved only for the short term. It currently banks under yet another subsidiary, Prosperity Revenue Merchandising Limited.
As per an October 11th tweet, fiat on ramping became problematic as the relationship with HSBC flailed:
The evidence is that it was possible to deposit USD yesterday through HSBC. Now, it is not possible pic.twitter.com/5HOCDEDHz3
— Larry Cermak (@lawmaster) October 11, 2018
Flight From Tether, Banking Woes Continue
On October 15th, Bitsonline reported a plunge in Tether–supposedly backed 1:1 by USD–to as low as 87 cents as concerns mounted about the exchange’s solvency and the remaining uncertainty surrounding its as-yet-unaudited bank accounts. Tether has since recovered to 96 cents, at press time, according to CoinBillboard. But 96 cents is still four percent shy of full value for the so-called stablecoin.
As its bank-hopping continues and uncertainty remains, faith in Bitfinex will only worsen. This is especially true when investors know that without an ability to seamlessly accept fiat, it will be difficult for the exchange to allow traders to cash out of their USDT positions for USD.
Have your say. Are the controversial exchange’s banking woes only going to continue after HSBC has cut ties with them once, only to allow a subsidiary to offer them services?
Images via Pixabay