Bitfinex Stops Accepting Fiat Deposits as More Banks Cut Ties

Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term’s biggest Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term, Bitfinex, has suspended all fiat deposits and stopped accepting bank transfers, just days after the exchange denied rumors that its operations are on the brink of insolvency.

The latest suspension, however, raises fundamental questions regarding the exchange’s ability to continue operating as it is once again fully cut off from the monetary system in a situation that is eerily reminiscent of a case that led similar venues to bankruptcy.

The crypto industry outlet The Block, which first broke the news, said Bitfinex was banking with HSBC through a private account of Global Trading Solutions. However, it’s not clear if the lender has blocked the crypto venue or what alternative channels will be considered to solve these transmission delays. In all cases, the complexity and scale involved mean that it is taking some time to return to normal payment cycles, though Bitfinex “expects the situation to normalize within a week.”

Bitfinex’s banking arrangements have been unclear since it lost access to Wells Fargo as its correspondent bank in April 2017. The British Virgin Islands-based company, which currently handles around half a billion in bitcoin trading volumes, opened a Polish bank account in November 2017 to begin trading euro pairs.

Bitcoin Price Reacts

Also in February, ING, the Netherlands’ largest financial services company, confirmed that Bitfinex holds a bank account with it, while questions mount over a digital token linked to its backers.

Bitfinex has created a complex structure to move funds within the banking system to stay in the game. Part of this, it used a string of third-party accounts based in Panama City.

Adding to its woes, Bitfinex was recently subject of scrutiny by the US regulators who asked the exchange to provide more information about Tethers, ‎which are tokens backed by US dollar deposits, with each ‎token always worth one dollar, as the two entities share the ‎same CEO, Jan Ludovicus van der Velde.‎ The CFTC also fined Bitfinex $75,000 in 2017 for offering illegal off-exchange commodity transactions without being registered as a futures commission merchant.

It may be the case, therefore, that banks are now entering into the fray to enforce CFTC’s action.

Bitcoin’s price at Bitfinex instantly reacted to the news, dropping to a three-week low below the $6,400 mark, seemingly detaching from a recent bull run off September lows.