Hong Kong Via Poland and Puerto Rico: Bitfinex Hops to Another Bank

According to The Block, the exchange is now working through a private account at the Hong Kong Bank of Communications. The name on the account is PROSPERITY REVENUE MERCHANDISING LIMITED.

To HSBC or not to HSBC

The exchange last week announced that it had temporarily stopped accepting fiat deposits and bank transfers. The new development is interesting for two reasons.

The first is the implication that the exchange lost the banking services of HSBC, of which it became a customer only two weeks prior (under the name Global Trading Solutions). At the time, The Block implied that HSBC may not have been aware of the true identity of its new customer.

Bitfinex is now banking with HSBC through a private account of Global Trading Solutions. Very good fit if you ask me. It’s also worth mentioning that all EUR, JPY and GBP deposits are paused but Bitfinex “expects the situation to normalize within a week”. Banking issues? pic.twitter.com/1pxQ13NO0m

— Larry Cermak (@lawmaster) October 6, 2018

The second reason that this is interesting is that HSBC owns 19.9 percent of Bank of Communications.

A complicated relationship

Bitfinex, which was founded in 2012, is one of the most popular cryptocurrency exchanges in the world, handling $239.3 million worth of trades in the last 24 hours (according to coinmarketcap.com). It is licensed in the British Virgin Islands.

As regards banks, it can hardly be called monogamous.

It was once a happy customer of American bank Wells Fargo, but that bank cut off its wire services in April 2017. Bitfinex sued the bank, but cancelled the suit after a week.

It then became a customer of Noble Bank of Puerto Rico, but this bank collapsed at the beginning of October 2018. That institution is now up for sale for as little as $5 million.

Bitfinex holds an account with Dutch corporation ING, and Polish bank Banku Spółdzielczym w Skierniewicach. At the latter, it is registered under the name of a shell company based in Panama.

In April 2018, Polish police found that two other South American shell companies were storing money linked to cocaine at this bank, and seized hundreds of millions of dollars from them. Polish media implied that there was a connection there, which Bitfinex denied.

Stories and allegations

Following the news of the collapse of Noble Bank, rumours swirled that Bitfinex was insolvent.

The exchange replied in a blog post that it was merely experiencing “ups and downs” resulting from its decision to accept fiat currency, made back in 2015.

“Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this…Stories and allegations currently circulating mentioning an entity called Noble Bank have no impact on our operations, survivability, or solvency,” read the statement.

THe exchange also provided links to cold wallets holding almost $1 billion in Bitcoin, $320 million in Ethereum, and $174 million in EOS.