Bitfinex has reportedly opened an account with HSBC using a likely shell company called “Global Trading Solutions.” As of the time of writing, it is unclear whether HSBC is aware that Global Trading Solutions has any connection to the crypto-focused startup or if the new account has any ties to Tether, the organization behind the popular USDT stablecoin.
Bitfinex’s Ongoing Banking Issues
Bitfinex and Tether previously had accounts with Noble Bank International, but have reportedly left the bank amid reports that Noble Bank International is looking for a buyer. Before that, Wells Fargo chose to end its relationship with Bitfinex, perhaps partially due to subpoenas from the United States’ CFTC, a leading regulatory body.
Bitfinex’s banking issues may be a major cause in reported difficulties with withdrawing funds from the exchange. Customer support staff said of the problem:
“As you may know, our finance is handled by Crypto Capital Corp so they must have ran into some sort of problem with one of their banking partners. … Commercial banks are very cautious when it comes to funds received from such sources and they can open investigations at any time without warning any of the involved parties, not even the receiving bank. It’s part of their due-diligence to combat money laundering and terrorism-finance.”
For those who are unaware, Crypto Capital Corp works on behalf of Bitfinex to handle payment processing through creating or buying a series of umbrella companies that are used to process payments. At least one user has reported that a withdrawal in Euro was routed through a construction company in Portugal. Bitfinex and Tether apparently operate in this fashion because no banks are willing to do business with them directly and their umbrella companies’ accounts are usually frozen by the banks or governmentally-backed law enforcement agencies once discovered.
The amount of money that has been seized or frozen has undoubtedly caused issues for Bitfinex, as it attempts to keep its fiat currency operations up and running. Poland has reportedly seized half a billion dollars from the crypto exchange and/or Tether in one scenario.
Traders Ditching Bitfinex; Volume May Be Suspiciously High
Traders looking for a stable exchange to buy cryptocurrency with fiat currencies or liquidate their crypto holdings for fiat now tend to avoid Bitfinex and work with regulated exchanges, like Gemini and Coinbase. Despite this, the aforementioned platform continues to show a high trading volume.
The combination of high trading volume and serious traders’ avoidance of Bitfinex may case some cryptocurrency insiders to scratch their heads. Could Bitfinex be a target for illegal activity like money laundering? Or is the platform holding back an undisclosed, yet large, sum of money even in the face of complaints about withdrawal issues so that it can artificially ramp up its volume?
If one goes by this exchange’s previous experiences with banks, the relationship between HSBC and Bitfinex will probably last a maximum of six months. If and when Bitfinex gets dumped by HSBC, it will probably face a choice between forming yet another umbrella company that can get a bank account and ditching its fiat currency operations altogether.