Major crypto exchange Bitfinex has responded to a recent media report that accused the exchange of publishing trading volume data from “a market that doesn’t exist,” in a tweet posted Oct. 23.

The controversy centers on an article from crypto media outlet CoinDesk, which had alleged that Bitfinex’s data on popular crypto statistics aggregator CoinMarketCap (CMC) was misleadingly inflated by reporting on a stablecoin Tether (USDT)-U.S. dollar trading pair, which as of press time appears to account for $33,598,474 — or 18.30 percent — of a total 24-hour traded volume of $182,742,351.

The article had argued that since the exchange does not provide a USDT/USD trading pair, this was an intentional strategy to make it appear as though a large volume of such trades were occuring on the exchange. In fact, Bifinex users are only able to deposit and withdraw both Tether and U.S. dollars through their accounts, rather than execute such trades.

A representative from CMC disclosed that the data was derived from Bitfinex’s in-house public application program interface (API), and was represented in CoinDesk’s article as being “confused” herself as to the meaning of the data point.

Bitfinex has tweeted its response to clarify its position, with a link to the original CoinDesk article, stating that:

api.bitfinex.com/v1/movement_volume/tether … is the sum of USDt dep/wds to/from Bitfinex. We are not ‘publishing’ fake numbers; the API method is called ‘movement_volume’ and isn’t part of our ticker API. Not pushed by us, pulled by CMC. Another not-so-brilliant example of anti Bitfinex/Tether FUD.”

The API link that was provided by both the exchange and CMC’s representative to Coindesk does not lead to a live website as of press time. On Bitfinex’s website, it is noted that some parts of the API may require authentication.

Bitfinex has not responded to Cointelegraph’s request for a live link by press time.

Bitfinex has recently been prompted to deny rumors that it was “insolvent” or facing banking issues in response to reports that its banking partner, Puerto Rico’s Noble Bank International, was seeking a buyer and had lost both Bitfinex and affiliated firm Tether as clients.

The following week, the platform temporarily suspended all fiat wire deposits without providing a specific reason, although it had acknowledged in its prior statement that “complications continue to exist” for Bitfinex “in the domain of fiat transactions.”

The exchange’s circuitous history of banking relationships dates back to April 2017, when U.S. bank Wells Fargo & Co. allegedly refused to continue operating as a correspondent bank. Bitfinex then filed a lawsuit against the bank that was quickly dropped.

Tether, for its part, has faced repeated criticisms of inadequate transparency over its claims to be backed one-to-one by the U.S. dollar, with some going so far as to accuse the firm of covering up an alleged fiat reserve deficit in complicity with Bitfinex.

The rumors intensified when Tether allegedly dissolved its relationship with a third-party auditor this January. However, an unofficial audit in June reported that Tether did have the appropriate amount of dollar reserves held in an unnamed bank.

Crypto investor and entrepreneur Michael Novogratz recently remarked on the Tether transparency controversy just as the stalwart coin had briefly lost its U.S. dollar peg, at one point trading as low as $0.91, amid reports of investors’ “loss of faith” in the asset.

 

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Hong Kong-based crypto exchange Bitfinex has hit back against claims it is insolvent and disclosed wallet addresses appearing to show it holds over $1.5 billion in crypto assets.

The company, which shares management with Tether, the venture behind the U.S dollar-pegged crypto USDT, stated in a blog post on Sunday that it is not insolvent, and “a constant stream of Medium articles claiming otherwise is not going to change this.”

Bitfinex called out such allegations as “a targeted campaign based on nothing but fiction.”

The firm further revealed cold wallet addresses holding bitcoin, ethereum and EOS, as claimed proof of the amount of the respective assets it currently holds. It added that the wallets’ contents represents a “small” fraction of its total assets, which also include undisclosed fiat holdings.

Based on the provided addresses, Bitfinex holds at least 148,467 bitcoin, 1.7 million ether, and over 35 million EOS. These cryptocurrencies are worth around $1.5 billion, based on data from CoinDesk’s price index and CoinMarketCap.

Bitfinex’s rebuttal follows a recent article on Medium published on Saturday that claimed the exchange is no longer solvent and urged users to withdraw their assets.

The author, who goes by the title “ProofofResearch” alleged that Bitfinex made “a concerted effort” to censor a number of posts on a sub-reddit that it moderates in which users reported issues with fund withdrawals for at least a month.

However, in its response, Bitfinex claims that “both fiat and cryptocurrency withdrawals are functioning as normal,” adding:

“Verified Bitfinex users can freely withdraw Euros, Japanese Yen, Pounds Sterling and U.S. Dollars. Complications continue to exist for us in the domain of fiat transactions, as they do for most cryptocurrency-related organizations.”

The Medium article also referred to a Bloomberg report last Tuesday as supporting evidence that the Puerto Rican Noble Bank is now mulling a sale and has stopped offering its banking services to both Bitfinex and Tether.

On that front, the exchange said information and accusations surrounding Noble Bank has “no impact” on its “operations, survivability, or solvency.”

The news comes as the latest controversy surrounding Bitfinex as one of the longest-running crypto exchanges. In January, both Bitfinex and Tether were reportedly subpoenaed by the U.S. Commodity Futures Trading Commission.

Months later, amid complaints over lack of transparency, the company published a report – via a law firm, instead of an auditing firm – which claimed the company had $2.55 billion in U.S. dollar reserves to back $2.54 billion-worth of USDT that were circulating on June 1.

However, as CoinDesk pointed out after reviewing the document, it only covered one point in time and did not provide proof of its level of collateralization for other periods.

This post credited to coindesk image source:Shutterstock

On Oct. 6, Larry Cermak, former editor at Diar and head analyst at The Block, reported that leading crypto exchange Bitfinex obtained a banking partner in HSBC, a $133 billion banking giant based in London.

“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’” Cermak said.

Why is HSBC Accommodating Bitfinex?

As one of the oldest cryptocurrency exchanges, Bitfinex has experienced some of the most difficult challenges an exchange could face, particularly before major cryptocurrency markets like Japan, South Korea, and the US offered clarity on cryptocurrency regulation.

The exchange’s conflict with Taiwanese banks is well-documented, and in April 2017, Bitfinex initiated a lawsuit against Wells Fargo, a US-based banking giant, for blocking deposits to the banking account of Bitfinex and disrupting operations of the business.

“The decision to initiate legal action is because we cannot allow precedents in this industry where clearing houses can disrupt businesses that are by all metrics complying with the rules in place. If we allow them to simply flip a switch and disrupt business, then there becomes a precedent in the bitcoin industry beyond just Bitfinex, so we believe it is the appropriate time to take action,” Bitfinex said at the time.

Since then, Bitfinex has moved out of Taiwan and relocated to the Caribbean and in May, Bloomberg reportedthat the exchange partnered with Noble Bank to process transactions sent by its clients.

However, Noble Bank has announced to file for bankruptcy following an in-principle deal to restructure debt in January and with that, the only banking partner of Bitfinex vanished.

bitfinex cryptocurrency exchange bitcoin

HSBC is really the first proper banking partner Bitfinex has obtained since Wells Fargo in 2017. If the deal between Bitfinex and HSBC can be sustained throughout the long-term, it will bring a level of stability to the operations of Bitfinex which the exchange failed to secure in the past four years.

Speaking to The Block, Kasper Rasmussen, director of communications at Bitfinex said that the firm cannot comment on the nature of the partnership between the exchange and HSBC.

“Bitfinex does not, and has never, commented on actual or potential business relationships and this is not subject to change now,” Rasmussen stated.

Given the the $200 million dollar daily trading volume of Bitfinex and the amount of fiat deposits the exchange receives from its international customers, it is not possible for the exchange to unilaterally announce its dependence on HSBC as a banking partner through a private banking account.

It is highly probable that the exchange, with strict Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements, obtained the banking service of HSBC through a strictly regulated channel.

Positive Impact on the Industry

Already, most exchanges in major markets like Japan and South Korea have obtained banking services by large financial institutions and commercial banks in their respective countries. If Bitfinex can sustain its partnership with HSBC, it will have a positive impact on the stability of the crypto market.

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Major crypto exchange Bitfinex has responded to a recent swathe of online rumors, denying that the firm is “insolvent” or facing banking issues, in an official blog post published October 7.

Bitfinex’s rebuttal comes in the wake of last week’s reports that the exchange’s banking partner, Puerto Rico’s Noble Bank International, is seeking a buyer and had lost both Bitfinex and affiliated firm Tether — who share a CEO, Jan Ludovicus van der Velde — as clients. In addition to Noble’s apparent woes, online bloggers were claiming that Bitfinex itself was insolvent, citing unverified reports of difficulties processing fiat withdrawals on the platform.

Bitfinex has today stated that “Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this.” Castigating its accusers for failing to substantiate their claims, the exchange posted links to three accounts it says “represent  a small fraction of Bitfinex cryptocurrency holdings,” noting that these “do not take into account fiat holdings of any kind”: Bitcoin cold wallet 1Ethereum cold wallet 1 and EOS cold wallet 1.

The first link indicates that Bitfinex holds 148,467.26 Bitcoin (BTC) – down from circa 226,000 BTC on Sept. 9 2018 – worth $978,758,494 at press time. The second shows Ethereum (ETH) holdings worth around $382,071,909, while the third EOS (EOS) account is valued at $203,406,110 at press time.

Bitfinex’s disclosures are noteworthy given the controversial backstory of U.S. dollar-backed stablecoin Tether (USDT) and concerns over a lack of transparency regarding its dollar reserves: the firm broke ties with its third-party auditor in Jan. 2018, and only issued an unofficial audit in June to prove that the coin is indeed backed 1:1 by the appropriate amount of fiat holdings.

Hinting at past contentions, Bitfinex wrote yesterday that these most recent accusations of insolvency are “once again, perhaps indicative of a targeted campaign based on nothing but fiction,” adding that both fiat and crypto withdrawals are “functioning as normal” for Euros, Japanese Yen, Pounds Sterling and U.S. Dollars.

The firm did however acknowledge that “complications continue to exist” for Bitfinex “in the domain of fiat transactions,” but claimed this is something prevalent among “most” crypto-related organizations.

In response to the Noble Bank reports, some in the crypto space have suggested that Bitfinex has now shifted to banking with HSBC via a private account registered under the name ‘Global Trading Solutions.’ The exchange did not respond to these claims in its post yesterday, although it did say that all Noble-related allegations “have no impact” on Bitfinex’s operations, survivability, or solvency.

Bitfinex is currently the 12th largest exchange globally by daily trade volumes, posting $169.5 million in trades over the past 24 hours to press time.

As previously reported, Bitfinex’s troubled history of banking relationships began in April 2017, when U.S. Wells Fargo & Co. allegedly refused to continue operating as a correspondent bank. Bitfinex then filed a lawsuit against the bank that was quickly dropped.

Both the exchange and Tether both received subpoenas from U.S. regulators last December for undisclosed reasons. Vocal critic and crypto blogger Bitfinex’d has repeatedly voiced concerns about the transparency of their banking systems.

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