Bitfinex has found itself defending its position as a well known and leading cryptocurrency exchange over the past week or so. Medium articles have been popping up on the daily attempting to prove (or disprove) the exchanges financial position as the crypto bear market heads into its tenth month.
These rumors have been vicious, layered attempts at self-fulfilling prophecy, and somewhat ‘goon-ish’, as they’ve attacked from all angles with what seems to be an agenda bent on bringing down an exchange for nothing more than sport? Is that what crypto twitter and other crypto social platforms have become?
In response, Bitfinex offered a response via Medium, the meat of which can be read here:
“Bitfinex introduced fiat operations in 2015 to act as a global point-of-access to traders wishing to enter the digital asset space. There have been ups and downs along the way, with complications scrutinised by watchful ‘investigators’ eagerly anticipating and predicting the industry’s collapse. These parties are quick to scream insolvency, seemingly with little understanding of what this concept means and what they are generally talking about.”
“In light of further rumours, we’d like to take this chance to address a few allegations head on:
1. Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this. As one of only a very few exchanges operating since 2013, with a small team and low operating costs, we do not entirely understand the arguments that purport to show us to be insolvent without providing any explanation about why. The wallets below represent a small fraction of Bitfinex cryptocurrency holdings and do not take into account fiat holdings of any kind.
How any rational party can claim insolvency when the opposite is there for all to see is interesting and, once again, perhaps indicative of a targeted campaign based on nothing but fiction.
2. Both fiat and cryptocurrency withdrawals are functioning as normal. 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 organisations. However, we continue to do our utmost to minimise any waiting times associated with fiat deposits and withdrawals.
3. Stories and allegations currently circulating mentioning an entity called Noble Bank have no impact on our operations, survivability, or solvency.
As always, we appreciate your continued support as we continue to service our customers and their needs in the digital token economy.”
The response by Bitfinex comes as a way of buttressing the allegations from previous Medium posts attempting to be ‘too clever by half’ and proving that Bitfinex is/was on the verge of collapse. That message was pushed via a now popular Medium article prompting the response from Bitfinex:
“Published October 6, the report references “censorship” of Reddit complaints about funds allegedly going missing, along with various other phenomena, including “serious problems with actually depositing and withdrawing cryptocurrency,” “connection issues” and “absolute failures” on the part of customer support staff.”
“Using either Bitfinex or partner project Tether (USDT) is “simply unsafe,” the article adds.”
“Bitfinex appeared to take the findings to heart, in retaliation linking to three cold wallets containing Bitcoin, Ether and EOS which it says constitute only a “small fraction” of its total reserves. “How any rational party can claim insolvency when the opposite is there for all to see is interesting and, once again, perhaps indicative of a targeted campaign based on nothing but fiction,” it continued.”
The links to wallets was an extraordinary measure that has seen responses range from ‘smart and strategic’ to ‘wildly irresponsible and a hackers dream’ across the crypto ecosystem.
Still, Bitfinex was smart to respond and take whatever measures necessary to first, protect consumers, and second, protect their brand. The thin line that protects consumers across unregulated cryptocurrency exchanges is the principle reason institutions have largely stayed off ‘broker-dealers’ masquerading as exchanges within crypto. These sorts of rumors that can turn into flash crash moments within a closed exchange community can crush consumers of any size.
The riddle of Bitfinex’s insolvency seems to have been answered for now, but these types of problems will persist as exchanges ebb and flow in popularity. BitMex may be hot today and the fastest growing exchange, but a strongly worded Medium article from an influencer or two could send the leveraged firm quickly in the wrong direction.
Whatever exchange you may find your crypto stationed at today, be careful, crypto is full of surprises.