Newsflash: Bitfinex Suspends Fiat Deposits amid Bitcoin Sell-Off

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Did cryptocurrency exchange giant Bitfinex play a role in last night’s bitcoin sell-off?

As first reported by The Block, the British Virgin Islands-based but Hong Kong-operated exchange has “temporarily paused” EUR, USD, JPY, and GBP wire deposits, although screenshots from customer accounts circulated on social media suggest that the situation should “normalize within a week.”

Reports had emerged last week that Bitfinex, long suspected to be holding funds at the now-faltering Noble Bank in Puerto Rico, had found a permanent banking partner in HSBC.

Per The Block, Bitfinex was actually banking at Bitfinex through a private account via Global Trading Solutions. Consequently, it’s possible that HSBC was not aware that it was holding Bitfinex assets, and — following the significant press coverage — has suspended or closed that account. If true, it marks the conclusion of another short chapter in Bitfinex’s long history of banking woes.

The cryptocurrency market has faced a significant sell-off on Thursday, raising questions about whether there is a connection between the decline and concerns over Bitfinex’s oft-opaque operations.

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BTC/USD | Bitfinex

At present, the bitcoin price is trading at a premium on Bitfinex, perhaps indicating that traders are not entirely comfortable holding funds on the platform during this period of uncertainty, which also raises questions about the stability of fiat withdrawals.

Bitcoin is currently priced at $6,303 on Bitfinex, compared to $6,199 on Coinbase Pro on Gemini, $6,194 on Bitstamp, and $6,192 on BitMEX, which works out to a premium of nearly two percent.

Bitfinex, as CCN reported, published a blog post earlier this week denying allegations that it is insolvent, though many critics remain unconvinced, particularly given the exchange’s close association with the controversial tether (USDT) cryptocurrency.

“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,” the firm said in the post. “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.”

Update 10/12: Kasper Rasmussen, director of Communications at Bitfinex, provided CCN with the following comment:

“Bitfinex has temporarily paused the depositing of fiat to customer accounts. We expect full trading capabilities to resume as normal within a week. All other service and business features on the platform remain unaffected and are operating as normal.”

Featured Image from Shutterstock. Charts from TradingView.

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Josiah is an assistant editor at CCN. A former ancient and medieval literature teacher, he has been reporting on cryptocurrency since 2014. He lives in rural North Carolina with his wife and children. He holds investment positions in bitcoin and other large-cap cryptocurrencies. Follow him on Twitter @Y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.