Business 8 October 2018

Paul How

Bitfinex denies insolvency allegations

With the financial troubles of Puerto Rico-based Noble Bank, where dollar reserves of stablecoin Tether are supposedly located, cryptocurrency exchange Bitfinex has felt the need to dismiss claims of insolvency.

“Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this,” the exchange said in a blog post. To support its argument, Bitfinex showed several cryptocurrency wallets it holds for clients. Presented were $980 million worth of BTC, $394 million worth of ETH, and $203 million worth of EOS.

“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,” Bitfinex said. However, it neglected to shows its balances in fiat currencies, and in Tether, which is supposedly 100% backed by the U.S. dollar.

Bitfinex’s post was a reaction to articles such as one by Medium writer ProofofResearch, who warned Bitfinex users to “remove your money now.” The article cited reports of customers unable to withdraw their fiat balances, of not being able to contact customer service, and of Bitfinex subreddits being deleted where customers claim not having received funds. “[I]t is simply unsafe for anyone to use the Bitfinex exchange or Tether since Tether is directly attached to Bitfinex,” ProofofResearch said.

Tether Limited, which issues Tether, has been linked to Bitfinex due to the same people listed in their articles of incorporation.  After reports of Bitfinex and Tether Limited no longer being clients of Noble Bank, and of the bank being badly in need of funds, Tether’s stability has been once more called into question.

But Bitfinex brushed off such concerns, stating, “Stories and allegations currently circulating mentioning an entity called Noble Bank have no impact on our operations, survivability, or solvency.”

It also noted that its fiat and cryptocurrency withdrawal services were “functioning as normal,” although “[c]omplications continue to exist for us in the domain of fiat transactions, as they do for most cryptocurrency-related organisations.”

Tether Limited has remained dodgy about being subject to an audit, though it procured the services of law firm Freeh, Sporkin & Sullivan LLP (FSS), that said, “FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018.” The same report by FSS also made the qualification that “the above confirmation of bank and Tether balances should not be construed as the results of an audit and were not conducted in accordance with Generally Accepted Auditing Standards.”

Bitfinex had been accused in 2017 of helping pump up the price of BTC to its record high of near $20,000 a coin. BTC is currently trading at about a third of its peak.

The exchange has been hacked several times. An August 2016 hack led to 120,000 BTC, worth about $70 million at the time, being stolen. Tether Limited has also been victim to a hack, with $31 million stolen from the Tether Treasury Wallet last November.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.

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