Bitfinex has vigorously refuted claims that it and its Tether stablecoin are on the brink of insolvency. Rumors have surrounded the opaque exchange for over a year, but have intensified in the past month. “Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this,” asserts a strongly worded denial.
Bitfinex Comes Out With All Guns Blazing
Rumors of Bitfinex and Tether’s potential insolvency have been swirling through the cryptosphere in recent days. Such has been their virality that the normally uncommunicative exchange has taken the step of breaking its silence. In a blog post published today, Bitfinex emphatically refuted all such unfounded claims and took aim at critics who “are quick to scream insolvency, seemingly with little understanding of what this concept means and what they are generally talking about”.
As proof of this, Bitfinex posted the address of its BTC, ETH, and EOS cold wallets. They contain almost $1 billion of bitcoin core, $400 million of ether and $200 million of EOS. Since the bulk of these assets are presumably customer deposits, they do not in fact prove that Bitfinex is solvent. Besides, even the platform’s staunchest critics have not denied that Bitfinex has significant crypto assets under its control. Rather, they have raised concerns over its fiat banking arrangements, and specifically the enduring question of whether the $2.8 billion of tethers in circulation are backed by dollar deposits.
“A Targeted Campaign Based on Nothing but Fiction”
Bitfinex hasn’t minced its words in seeking to rebut the many rumors regarding its business, excoriating a “a targeted campaign based on nothing but fiction”, and insisting that customer fiat deposits are working as normal. It’s also insisted that anything that might be going on with Puerto Rico-based Noble Bank, itself the subject of insolvency rumors, is none of its concern. It’s been revealed that Bitfinex is now banking with HSBC, via an intermediary, though it is unclear whether HSBC is aware of this due to funds being funneled through the private account of Global Trading Solutions.
Bitfinex, currently the world’s 12th largest crypto exchange by trading volume, has conceded that it has been suffering from banking issues, acknowledging:
Complications continue to exist for us in the domain of fiat transactions…However, we continue to do our utmost to minimise any waiting times associated with fiat deposits and withdrawals.
Certain figures on crypto Twitter have been encouraging traders to get their funds off Bitfinex before the platform collapses or is shut down by authorities. Both predictions, at this time, are likely to be wide of the mark, although Bitfinex’ critics remain defiant. One, operating under the name “Proof of Research”, has posted a rebuttal to Bitfinex’ blog post, pointing out that in the past month “Bitfinex has removed over 77,000 bitcoins from their wallet. That amount represents 34% of the total funds that were in that wallet.”
Running a top 20 cryptocurrency exchange, especially one that has been established for as long as Bitfinex, ought to be a very profitable enterprise. Questions still remain over Tether, however. To date, no journalist has managed to unearth evidence of a customer depositing or withdrawing fiat currency in return for USDT. Until such a time, the rumor mill will continue to thrive.
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Images courtesy of Shutterstock, and Bitfinex.
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