Troubled cryptocurrency exchange Bitfinex has apparently halted all fiat deposits to user accounts, if anonymous sources reporting to The Block are correct. The biggest USD to Bitcoin exchange in the world recently ended its relationship with Noble Bank in Puerto Rico – a bank on the brink of bankruptcy – but has been keeping its business afloat via a private account at banking giant HSBC.
There is no official word from Bitfinex’s blog or Twitter about this fiat deposit suspension but similar reports confirming the same can be found on Twitter. There appears to be a note on Bitfinex’s website saying fiat deposits are indeed halted, and that this should be resolved within a week.
— Squeeze (@cryptoSqueeze) October 11, 2018
Another thing which may confirm this news is a USD 100 trading premium on Bitfinex, nearly 2%, versus the other major USD exchanges Coinbase and Bitstamp. Generally, the USD price of Bitcoin is nearly the same on these exchanges but in the last few days, a divergence began to develop. This is possibly caused by traders trading funds into Bitcoin to get their funds off of Bitfinex, since if fiat deposits are disabled, that means fiat withdrawals probably aren’t working very well or at all. The Bitfinex subreddit is filled with mixed reviews, some which say withdrawals are working, others which say they are not. Another possible indication of this is the spike of Bitfinex’s daily trading volume up to USD 663 million as of 11 October 2018, well above their normal trading volume.
Previous reports indicate that Bitfinex had begun using a private bank account under the name Global Trading Solutions at banking giant HSBC after severing ties with Noble Bank, a bank they only recently began using after losing their Wells Fargo accounts in 2017. Bitfinex refused to comment on its relationship with HSBC and it is possible HSBC wasn’t aware that Bitfinex had begun using the bank for fiat needs.
It was further speculated that HSBC told Bitfinex to stop using the account after the news hit mainstream crypto media, leading to the current situation where deposits are not possible. Bitfinex previously asserted on 7 October that everything was fine with it and that all fiat deposits and withdrawals were functioning; obviously, this situation has changed.
Bitcoin had been very stable near USD 6,600, with some slight fluctuations, during the month of October 2018. However, this changed on 10 October with a sudden drop to USD 6,200. This drop continues today and now Bitcoin’s price is approaching USD 6,100. It’s possible that the halt of Bitfinex’s withdrawals is playing a role in this price drop since the lack of functionality of the biggest USD to Bitcoin exchange in the world is cause for concern for traders.
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