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17:11, 08 October 2018

Fake News? Cryptocurrency Exchange Bitfinex Denies Rumors of Insolvency


Fake News? Cryptocurrency Exchange Bitfinex Denies Rumors of Insolvency


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Responding to longstanding rumors of financial struggles and outright accusations of insolvency, key cryptocurrency exchange Bitfinex has provided a glimpse into its cryptocurrency balance sheet.

The exchange, which is registered in the British Virgin Islands but headquartered in Hong Kong, sought to dispel these rumors in a blog post published on Sunday, which included links to 3 cold wallets &#8212 a single each for bitcoin, ethereum, and EOS, holding funds collectively worth about $1.six billion at the time of writing &#8212 that the organization claimed represented a &ldquosmall fraction&rdquo of its cryptocurrency holdings, not to mention its fiat deposits.

Even though not named directly in the post, the trigger for Bitfinex&rsquos choice to disclose its cryptocurrency holdings appears to have been a lengthy Medium post published on Oct. six by a pseudonymous user named ProofofResearch. That post, which was broadly circulated on social media, claimed that Bitfinex customers had been experiencing major fiat and cryptocurrency withdrawal concerns, likely indicating that the platform was no longer solvent.

Answering these criticisms, Bitfinex mentioned:

&ldquoBitfinex is not insolvent, and a continual stream of Medium articles claiming otherwise is not going to adjust this. As 1 of only a very handful of exchanges operating since 2013, with a modest team and low operating expenses, we do not completely comprehend the arguments that purport to show us to be insolvent with out supplying any explanation about why.&rdquo

&ldquoHow any rational party can claim insolvency when the opposite is there for all to see is intriguing and, as soon as again, maybe indicative of a targeted campaign based on nothing at all but fiction,&rdquo the firm continued. &ldquoComplications continue to exist for us in the domain of fiat transactions, as they do for most cryptocurrency-associated organisations. Nevertheless, we continue to do our utmost to minimise any waiting occasions associated with fiat deposits and withdrawals.&rdquo

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The Puerto Rico-based Noble Bank is reportedly no longer offering banking services to Bitfinex and Tether.

Such rumors have intensified as the Puerto Rico-primarily based Noble Bank, long believed to have been the most recent banking companion of Bitfinex and Tether &#8212 the stablecoin issuer that shares a management group with the exchange &#8212 is mentioned to have stopped supplying banking services to these cryptocurrency clientele amid its decision to place itself up for sale.

Bitfinex has by no means acknowledged Noble as its banking partner, and the exchange claimed that any news stories involving the institution have had no influence on the exchange operator&rsquos enterprise. The firm said, &ldquoStories and allegations presently circulating mentioning an entity named Noble Bank have no influence on our operations, survivability, or solvency.&rdquo

That may possibly be because, as CCN reported, Bitfinex has apparently found a new, much much more prestigious bank to home its assets. Per the report, Bitfinex is now banking with HSBC, the $133 billion financial institution primarily based out of London, providing the exchange with its initial &ldquoproper&rdquo banking companion considering that Wells Fargo severed ties with the firm in early 2017. Even so, Bitfinex has &#8212 correct to type &#8212 not confirmed the development publicly.

Many issues about Bitfinex&rsquos solvency stem from its close relationship with Tether &#8212 creator of the eponymous tether (USDT) cryptocurrency token, whose value is pegged to the U.S. dollar and purportedly backed by physical dollars stored in bank accounts. Similarly criticized for not operating transparently, Tether has been accused of operating a fractional reserve bank and contributing to a massive price manipulation scheme. Whilst a transparency report published more than the summer season suggested USDT was full-backed by physical USD, Tether and Bitfinex have not undergone a full-scale audit, even as USDT&rsquos marketplace cap has swelled to $2.8 billion.

Recognizing the desire for another fiat-backed stablecoin alternative, many main cryptocurrency firms like Circle and Gemini have created &ldquoregulated&rdquo stablecoins. Even though nonetheless in their early days, these tokens have tended to trade at a slight premium to USDT, maybe suggesting that traders trust them a lot more than the controversial tether.

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Published at Mon, 08 Oct 2018 15:25:22 +0000


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