Given the recent troubles the Bitfinex exchange has gone through, it is evident something needs to happen. As of last night, the company announced they will be halting deposits for all supported fiat currencies. The company’s Taiwan banks are blocking and refusing all deposits coming in as of today. The reason behind this decision is ultimately unclear. This is now good news by any means, though.
Bitfinex Halting Deposits Is Bad
Things have been unraveling pretty quickly for Bitfinex over the past few weeks. Not too long ago, the company mentioned how US$130m worth of customer funds was locked in their Taiwanese bank accounts. Wells Fargo seemingly refused to accept transfers originating from these financial institutions, which caused a lot of issues. So far, that matter has not been resolved either, but it looks like things are only getting worse.
While it is not necessarily a sign of Bitfinex going the Mt. Gox route, the company is no longer accepting fiat currency deposits as of today. That means any incoming wire transfer will be automatically refused by their Taiwanese banks. Anyone looking to buy bitcoin with fiat currency will have to go elsewhere to do so, that much is certain. The bigger question is why Bitfinex made this announcement, as they never explained what is going on with their bank accounts in the first place.
It is not hard to see why such news can cause widespread market panic. So far, the bitcoin price has not shown any signs of losing value anytime soon. However, when one of the world’s biggest exchanges can’t accept fiat deposits and has funds locked in their bank accounts to customers can’t move it out, things are not looking good at all. In fact, it could be a sign of how Bitfinex may not be around for much longer moving forward. That is unless they can sort their fiat currency issues in a quick and convenient manner.
Experts believe Bitfinex will recover just fine, although not everyone will share that sentiment right now. A year ago, the exchange got hacked and lost US$72m, which they took out of customer accounts. They then redeemed outstanding debt right before fiat currency withdrawals became impossible. Now they are not accepting any new funds coming in. Those are three major strikes against the exchange which do not bode well by any means. Only time will tell what the deal is with Bitfinex, but for now, a cautious approach is more than warranted.
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