Bitfinex has paused all fiat currency deposits for the US dollar, Euro, Yen and Pound Sterling, The Block reports. Although deposits are expected to resume within a week, the troubles are likely to fuel rumors of an impending collapse.
The temporary suspension of fiat deposits to the fourth largest cryptocurrency exchange would ordinarily be considered a normal glitch, if it did not follow on the heels of wild rumors about the solvency of Bitfinex and its banking partners.
Last week, Bitfinex defended itself from a flurry of Medium reports (now removed) claiming that the exchange was insolvent. In a blog post on October 7th Bitfinex staff even published access to various cold wallets, showing that the exchange still controls billions of dollars in Bitcoin, Ethereum and EOS.
Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this. As one of only a very few exchanges operating since 2013, with a small team and low operating costs, we do not entirely understand the arguments that purport to show us to be insolvent.
-Bitfinex blog post – October 7th 2018
Banking Problems For Bitfinex?
The rumors were prompted by reports that Bitfinex’s banking partner, Puerto Rico’s Noble Bank International, was no longer profitable and in search of a buyer. Bitfinex strongly denied these “stories and allegations,” while insisting that the bank’s troubles “have no impact on our operations, survivability, or solvency.”
Early reports suggest that Bitfinex has moved its fiat accounts to HSBC to take over its banking, and the deposit troubles may be related to the switchover. As Bitfinex pointed out in the blog post, it is not alone in struggling with the banking system: “Complications continue to exist for us in the domain of fiat transactions, as they do for most cryptocurrency-related organisations.”
Speculation is Inevitable
Some sources have suggested that investors rushing to get out of Bitfinex may have contributed to a Bitcoin sell-off and yesterday’s dip in the market. The figures show that the exchange held 226,000 BTC on September 9th, which has dropped to 141,467 at the time of writing. That may be indicative of investors either selling or pulling funds out of the exchange.
The stock market had its worst day in eight months yesterday, though, and there were clearly a number of factors at work. It remains to be seen how the situation at Bitfinex plays out and when – or if – normal service is resumed as promised in the days ahead.
The author is currently not invested in any digital currency.