Bitfinex Challenges Insolvency Rumors, Provides Proof of Wallet Reserves
Top-three cryptocurrency exchange Bitfinex is pushing back against claims that call its solvency into question.
The Hong Kong-based company released a blog post on October 7, 2017, that states, contrary to recent rumors, it is not insolvent. In its defense, the company provides links to its public wallet addresses, stating that hearsay in spite of these publicly verifiable records is “perhaps indicative of a targeted campaign based on nothing but fiction.”
“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 without providing any explanation about why.”
Over the weekend, a since-removed Medium post by user ProofofResearch warns readers to exit Bitfinex, alleging that complaints of restricted and frozen withdrawals expose its insolvency. The post goes on to air grievances shared on Reddit regarding these withdrawal issues, and the author accuses r/bitfinex moderators of censoring such posts.
“Both fiat and cryptocurrency withdrawals are functioning as normal. Verified Bitfinex users can freely withdraw Euros, Japanese Yen, Pounds Sterling and U.S. Dollars. Complications continue to exist for us in the domain of fiat transactions, as they do for most cryptocurrency-related organisations,” Bitfinex writes in its post.
To further quell community skepticism, Bitfinex offered block explorer links to its bitcoin, ether and eos cold wallet reserves. Not including fiat holdings, the exchange states that these wallets “represent a small fraction of Bitfinex cryptocurrency holdings.”
Collectively, the wallets hold just over $1.5 billion in assets. The majority of this fortune is accrued in the exchange’s bitcoin wallet, which holds 148,467 BTC worth roughly $989 million at current exchange rates. Its second largest holding, the exchange’s ether wallet contains 1,726,496 ETH (~$395 million), and its eos reserves weigh in at 35,374,975 ($209 million).
Wrestling Against Scrutiny
Bitfinex’s clarifying its financial position comes after news broke last week that one of its former banking partners is looking for a buyer, a development that ProofofResearch argues further points to Bitfinex’s own financial troubles.
Searching for a bailout of sorts, the Puerto Rican Noble Bank is “no longer profitable,” according to a source close to the matter who tipped the news to Bloomberg. With Noble Bank’s cryptocurrency partners reportedly jumping ship, Bitfinex has also severed its relationship with the financial firm, affirming in its blog post that “[stories] and allegations currently circulating mentioning an entity called Noble Bank have no impact on [its] operations, survivability, or solvency.”
Popular stablecoin Tether also terminated its relationship with the bank. Operated by a like CEO in Jan Ludovicus van der Velde, Tether’s and Bitfinex’s operations, purportedly, are intrinsically linked, and the two companies have been long entangled in a conspiracy that charges Tether is not fully backed by U.S. dollar reserves.
An academic report that points to Tether’s artificially inflating bitcoin’s price during the 2017 run-up has only stoked skepticism. Though, an earlier study provides evidence to the contrary, and Tether has produced an in-house attestation overseen by the Freeh Sporkin & Sullivan law firm to clear its name. However, this attestation is not an official audit, something that Tether states is impossible for a company in its position to attain, even as other stablecoin projects have suggested otherwise.
This article originally appeared on Bitcoin Magazine.
by Colin Harper via Bitcoin Magazine