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Bitfinex are having quite a week, to put it mildly. You wouldnât know as much by monitoring their social channels though: thereâs not a word about that unfortunate $30 million Tether hack; just a tweet noting how pleased they are to announce BTC:EUR trading. On the surface, itâs business as usual at âthe worldâs largest and most advanced bitcoin trading platformâ. Step outside the Bitfinex bubble, however, and things are anything but rosy.
See also: Exchanges Suspend USDT Transactions After $30 Million Tether Treasury Wallet Hack
Untethered, Goxxed, and Bitfinexed
Where to start with Bitfinex? Questions surrounding the companyâs secrecy, lack of proper banking facilities, and odd relationship with Tether have abounded for months, but lately those murmurs have grown into a crescendo, prompting the exchange to break its silence, tweeting:
Days later and that promised statement has failed to materialize. In fairness to âfinex, theyâve had a lot on, what with the alleged loss of $30 million in USDT, prompting Tether to issue a hard fork to isolate the stolen funds. (Intriguingly, it appears the Tether hacker also made off with 19,000 BTC from Bitstamp in 2015 and another 8,500 from Huobi the same year. Presumably they forgot to hodl, hence their emergence, two years later, to re-up. UPDATE: Huobi have since said they werenât hacked, although the individual did withdraw 12,000 BTC from their exchange.) Â
Biftfinexâ shortage of proper banking facilities and increasing reliance on tethers â tokens pegged against the US dollar â is well-documented, and has been the subject of relentless investigation by one dogged individual. Bitfinexed, who has been a thorn in the side of the exchange, has even been using a voice changer during interviews, such is his desire to remain anonymous.
Itâll All Come Out in the Wash
Just another weekend at Bitfinex.
Accusations of wash trading at Bitfinex â âprintingâ tethers and using them to artificially bump the price of bitcoin before cashing out, sending the USD to Tether, and repeating the cycle â arenât the only ones the exchange has been facing. In Warning Signs About Another Giant Bitcoin Exchange, the NYTâs Nathaniel Popper addresses the other questions that are hanging over Bitfinex, namely:
1. Why has Bitfinex been unwilling to reveal anything about the 2016 hack of 120,000 BTC (or the 2015 hack of 1,500 BTC for that matter)?
2. Why doesnât Bitfinex reveal its current banking arrangements or where its money is stored?
3. Where is the promised audit that will assuage Tetherâs doubters once and for all? (The company did produce a financial statement in September, but it failed to prove that each tether is backed by a US dollar.)
The article quotes Emin GĂŒn Sirer, a computer science professor at Cornell University, as saying:
Iâm worried about the systemic risk that this centralized company poses, and Iâm worried that if they go down, they will take down the space with them.
The New York Timesâ Popper also reveals the following nugget:
Laughing All the Way to the Bank
While the Tether brouhaha was playing out this week, it also emerged that Bitfinex has yet another new bank. This time, its European home is with the obscure Bank Polskiej SpĂłĆdzielczoĆci â also the home of CEX.io â under the name of CRYPTO SP.ZO.O. Why isnât Bitfinex using its own name and why is it with a bank that ranks 15th in Poland in terms of asset value and 26th in terms of number of outlets? But wait, the plot thickensâŠ
The director of Bank Polskiej SpĂłĆdzielczoĆci is Molina Lee Ivan Manuel who is also the director of numerous Panamanian shell companies. Offshore shell companies are a recurring theme with Bitfinex; the so-called Paradise Papers, which leaked this month, show that Bitfinexâ operators used an offshore firm to help them incorporate Tether in the British Virgin Islands.
One of the companies Molina Lee Ivan Manuel is listed as a director of is Crypto Capital Corp. A quick Google reveals a string of red flags amidst user concerns over missing money and shady business practises. Perform a company search for CRYPTO SP.ZO.O â Bitfinexâ European banking name â and this comes up:
Thatâs right, CRYPTO SP.ZO.O appears to be 99% owned by Crypto Capital Corp. Curiouser and curiouser.
The Case for the Defense
There are clearly questions that Bitfinex needs to answer, not only to reassure its customers, but also the cryptocurrency community at large, who are worried by the knock-on effects if the worldâs largest exchange was to fail. In defense of Bitfinex, there are solid reasons why it remains the market leader including high liquidity and a trading engine that actually works, which is more than can be said of some exchanges. Moreover, Google any company and youâre bound to find dissatisfied customers and unverifiable claims of impropriety.
On the other hand, there are areas where Bitfinex seriously lags behind the competition. Withdrawals, for example, are notoriously slow. Theyâre supposed to be processed within 12 hours, but waits of 24 hours or longer are not uncommon.
Despite shady banking, dubious use of tethers, another hack, and slow withdrawals, there is nothing to suggest that Bitfinex is on the verge of collapse. Nevertheless, the companyâs operators could dispel much of the FUD and rumors if they were to clarify their current banking relationship and finances. Itâs been three days now since Bitfinex promised âa formal announcementâ. Tick tock.
Do you think Bitfinex have questions to answer? Let us know in the comments section below.
Images courtesy of Shutterstock.
The post Questions Mount as Bitfinex Stay Silent in the Wake of the Tether Hack appeared first on Bitcoin News.
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