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Newsflash: Bitfinex Unveils ‘Distributed Banking Solution,’ Resumes Fiat Deposits

Last Updated March 4, 2021 3:49 PM
Josiah Wilmoth
Last Updated March 4, 2021 3:49 PM

Cryptocurrency exchange giant Bitfinex has unveiled a “distributed banking solution” that it says will be a “resilient” solution to its much-chronicled banking woes.

Announced on Tuesday, the new system will allow KYC-verified users to immediately begin initiating fiat deposits across USD, GBP, JPY, and EUR, which had been paused for almost a week.

Under the new system, eligible users must initiate a fiat deposit through their exchange accounts, which involves specifying the exact amount and currency they plan to deposit. Within 48 hours, the cryptocurrency exchange will send the user a deposit notification approving the transfer and providing the bank details specific to that individual transaction.

Alleging that this new system will allow the exchange’s operations to be more “durable,” the company said:

“We believe this system to be significantly more durable in the face of sustained attacks by our competition and their supporters. Ongoing campaigns against us will only result in our company becoming stronger and better.”

Bitfinex — which reportedly shares a management team with Tether, issuer of the controversial USDT stablecoin — did not reveal the bank(s) with whom it is working, nor did it explain the nature of those banking relationships.

However, screenshots purportedly from Bitfinex accounts show a message that sternly warns traders not to reveal banking information to anyone outside of their financial institutions, as doing so could “damage…the entire digital token ecosystem.”

The message says:

“This banking information is being provided to you for purposes of contributing good faith funding to your account on Bitfinex….This banking information is commercially sensitive and confidential. You should be very careful with this information. You are asked to keep this information to yourself and to not share it except with your financial institution. Divulging this information could damage not just yourself and Bitfinex, but the entire digital token ecosystem. Accordingly, you are cautioned that there may be serious negative effects associated with this information becoming public.”

As CCN.com reported, Bitfinex has long struggled to find a stable banking partner, ever since Wells Fargo cut off access to its services last March. The exchange is said to have bounced around to a variety of banks in the months that followed, before seemingly finding a willing partner in Puerto Rico’s Noble Bank. However, Noble Bank recently filed for bankruptcy, about the same time that Bitfinex and Tether withdrew their reserves from the institution.

Following its departure from Noble Bank, Bitfinex is said to have briefly held funds at banking giant HSBC, though that relationship was reportedly severed so quickly that it’s not clear whether HSBC was aware that it was holding Bitfinex funds when the account was opened.

According to CoinMarketCap, Bitfinex regularly ranks as one of the world’s largest cryptocurrency exchanges. Its market share has climbed in recent days amid market volatility connected with the loss of Tether’s USD peg. Over the past 24 hours, the platform has seen nearly $544 million in volume, which is second only to Binance. In the past month, the company has processed more than $13.5 billion worth of trades, making it the fourth most popular cryptocurrency exchange.

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