With Bitcoin trading at a premium on Bitfinex, the exchange has suspended fiat currency deposits. The suspension affects the Euro, U.S. Dollar, Japanese Yen, and U.K. Pound Sterling. This has led to speculation that Bitfinex is close to insolvency or has lost its bank account for the umpteenth time.
However, Bitfinex has denied that this rumor holds credence, releasing a press release to say that it “expects the situation to normalize within a week.”
The Latest Round in Bitfinex’s Fiat Dramas
Bitfinex’s current suspension of fiat deposits is the latest in its ongoing complications with transactions involving government-issued currencies, not crypto assets. The exchange has long been accused of deliberately making it difficult to withdraw fiat, as such, the traders who still use Bitfinex prefer to make withdrawals in Bitcoin.
But, some users have reported that they even have trouble withdrawing Bitcoin, which may mean that Bitfinex is running out of Bitcoin as it continues to struggle with fiat deposits and withdrawals.
Bitfinex’s apparent inability to hold a bank account for an extended period of time is likely a factor in its fiat banking support problem. The platform has been frozen out by Wells Fargo and moved away from Noble Bank, the latter of which has recently put itself up for sale. Most recently, it opened a bank account with HSBC through a shell company, but some worry that this was a temporary stint.
Volume May Be Faked
Despite its fiat problems, Bitfinex is currently ranked fourth by trading volume among exchanges. This has left several observers wondering about the possibility that fake volume and money laundering on the platform may be commonplace. The prominent crypto commentator known as Bitfinex’ed recently tweeted, “If Bitfinex exchange can’t take fiat deposits, they can’t do fiat withdrawals without engaging in money laundering.”
If Bitfinex exchange can’t take fiat deposits, they can’t do fiat withdrawals without engaging in money laundering.
But Bitfinex doesn’t want to come clean and tell people that fiat withdrawals are “temporarily paused”.
Quit using exchanges founded by Ponzi scammers.
— Bitfinex'ed 🐧 (@Bitfinexed) October 11, 2018
Bitfinex may be able to stay afloat in the short term, however, through the use of its connections with Tether through the exchange CEO’s alleged connection with the stablecoin foundation. However, the sale of Tether may be an unsustainable funding source if Bitfinex cannot keep up with fiat deposits and withdrawals in the long run.
At the time of this writing, Bitfinex has not given a reason for the suspension of fiat currency deposits. Its estimate that it will be able to resolve the situation within a week may be optimistic, considering the difficulty it has had with keeping a bank account.