Company:Bitfinex

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Short description: Cryptocurrency exchange
Bitfinex, Inc.
Bitfinex logo.svg
Type of businessPrivate
Available inEnglish, Russian, Chinese, Spanish, Turkish
Founded2012; 12 years ago (2012)
Area served52 countries
ProductsCryptocurrencies

Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Ripple, OmiseGO, Monero, NEO, EOS

Fiat Currencies

United States dollar , EUR, JPY, GBP
ServicesCryptocurrency exchange, P2P Margin trading, P2P Margin lending, OTC
Websitewww.bitfinex.com

Bitfinex is a cryptocurrency exchange owned and operated by iFinex Inc, and is registered in the British Virgin Islands.[1][2] Bitfinex was founded in 2012. It was originally a peer-to-peer Bitcoin exchange, and later added support for other cryptocurrencies.

Bitfinex was one of the first professional platforms built for cryptocurrency trading. It offers high-volume trading and both spot and derivatives products, including exchange trading, margin trading, margin funding (P2P lending), over-the-counter markets, and derivatives trading.[3]

Bitfinex supports over 170 cryptocurrencies on its active trading platform, including Bitcoin, Ethereum, Tether, Solana, Litecoin, and many others.[4]

History

2012: Early history

Bitfinex was founded in December 2012 as a peer-to-peer Bitcoin exchange offering digital asset trading services to users worldwide. Bitfinex initially started as a P2P margin lending platform for Bitcoin and later added support for more cryptocurrencies. It was one of the first professional platforms built for cryptocurrency trading.[5]

Raphael Nicolle, an IT technician from Paris, launched Bitfinex following a previous project called Bitcoinica. He continued to work as a developer for the platform until the beginning of 2017.[5]

Bitfinex was designed to offer high-volume trading and both spot and derivatives products, including exchange trading, margin trading, margin funding (P2P lending), over-the-counter markets, and derivatives trading.[6]

2015–2016: New partnership and security breach

In 2015, Bitfinex partnered with Palo Alto company BitGo to offer highly-secured "wallets" that allow people to store their digital currencies online. BitGo has insurance against Bitcoin theft.[7]

In May 2015, the exchange was hacked, which resulted in the loss of 1,500 Bitcoins or about $400,000 USD of their customers' assets.[8][9]

In June 2016, the U.S. Commodity Futures Trading Commission ordered Bitfinex to pay a $75,000 fine for offering illegal off-exchanged financed commodity transactions. The order also found that Bitfinex violated the Commodity Exchange Act by not registering as a Futures Commission Merchant.[10]

2017–2018: Banking changes

In April 2017, Bitfinex announced it was experiencing delays in processing United States dollar withdrawals after Wells Fargo cut off[11] its wire transfers. Shortly after the Wells Fargo cutoff, Bitfinex stated all international wires had been cut off by its Taiwanese bank. Since then, Bitfinex has moved between a series of banks in other countries without disclosing to customers where the money is kept.[12][11][13]

Noble Bank International of San Juan, Puerto Rico reportedly handled some dollar banking for the exchange in 2017 or 2018.[14] The banking relationship was reportedly terminated in September 2018 as Noble Bank encountered financial difficulties.[15]

In March 2018, British Virgin Islands-based Bitfinex confirmed the exchange’s plans to relocate its primary server infrastructure to Zug, Switzerland.

In May 2018, Bitfinex emailed some of its users asking for some tax details, which the company indicated it would share with the government of the British Virgin Islands, which might, in turn, pass it on to the governments of the users' countries of residence.[citation needed]

Phil Potter, Chief Strategy Officer of Bitfinex, left the exchange on June 22, 2018.[16]

In October 2018, Bitfinex reportedly had difficulties with its banking relationships. Its management stated, "Bitfinex is not insolvent on October 7."[17]

2019: Launch of Tether

Tether is a cryptocurrency stablecoin pegged to the U.S. dollar. It is owned by iFinex, which also owns Bitfinex. It was launched as RealCoin in July 2014 and was rebranded as Tether in November 2014. As of January 2023, Tether was the third-largest cryptocurrency after Bitcoin and Ethereum with a market cap of $68 billion.[18] Tether and Bitfinex funded the development of HolePunch, an encrypted, peer-to-peer communication platform and made its code open-source in December 2022. Paolo Ardoino, the Lugano, Switzerland-based chief technology officer of Bitfinex and Tether, said that this technology is the "Bitcoin of communications."[19]

In April 2019, New York Attorney General Letitia James launched an investigation accusing Bitfinex of using the reserves of Tether, an affiliated company, to cover up a loss of $850 million to a Panamanian payment processor known as Crypto Capital Corp.[20] [21] Reggie Fowler, who is alleged to have connections with Crypto Capital, was indicted on April 30, 2019, for running an unlicensed money-transmitting business for cryptocurrency traders.[22] He is believed to have failed to return about $850 million to an unnamed client. Investigators also seized $14,000 in counterfeit currency from his office.[22] Bitfinex had been unable to obtain a normal banking relationship, according to the lawsuit, so it deposited over $1 billion with a Panamanian payment processor known as Crypto Capital Corp. No contract was ever signed with Crypto Capital.[21] James alleged that in 2018 Bitfinex knew or suspected that Crypto Capital had absconded with the money, but that their investors were never informed of the loss.[21]

Bitfinex's reported figures for 2017 were $333.5 million in gross profits, $6.8 million in expenses, $326 million in net profit, and $246 million in dividends.[23]

2020–2023: Acquisitions and investments

On October 15, 2021, it was announced that Bitfinex would pay a $1.5 million fine to the Commodity Futures Trading Commission for illegal, off-exchange retail commodity transactions in digital assets with Americans.[24]

Bitfinex launched a new payment technology that would allow online merchants to receive contactless and borderless cryptocurrency payments in 2021, called Bitfinex Pay.[25]

Bitfinex, Kraken, and KuCoin began exploring ways to enter the Indian cryptocurrency market in 2021.[26]

In September 2022, Bitfinex, alongside several other leading exchanges, temporarily paused all deposits and withdrawals of Ethereum-based tokens during the Ethereum software upgrade known as the Merge.[27]

In December 2022, Bitfinex released its "Freedom Manifesto," a document that highlights the advancement of distributed, open-source software that aligns with the libertarian ideas of Austrian School economists and cypherpunks' approach to writing code.[19][28]

As of January 2023, Bitfinex plans to open an office in El Salvador. El Salvador plans to issue its "volcano" token this year, which will be issued using blockchain technology, and which will trade on Bitfinex’s exchange.[29] In April 2023, Bitfinex was granted a license by El Salvador’s National Digital Asset Commission to operate in the country. The license permits Bitfinex Securities El Salvador to facilitate tokenized assets.[30][31]

On May 24, 2023, Bitfinex announced it would invest in the Chilean cryptocurrency exchange Orionx. Bitfinex stated that it aims to expand its presence in Chile and Latin America.[32]

Controversy

Main page: Finance:2016 Bitfinex hack

In August 2016, Bitfinex announced it had suffered a major security breach.[33] Immediately thereafter, Bitcoin's trading price plunged by 20%.[34] After learning of the breach, Bitfinex halted all Bitcoin withdrawals and trading.[2] In that hack, the second-biggest breach of a Bitcoin exchange platform, 119,756 units of Bitcoin,[34] worth about $72 million at the time, were stolen. The Bitcoin was taken from users' segregated wallets and Bitfinex said it was tracking down the hack.[35] Exchange customers, even those whose accounts were not broken into, had their account balance reduced by 36% and received BFX tokens in proportion to their losses.[36] All users who kept their BFX tokens were reimbursed in full within eight months of the hack, in April 2017.[37] The exchange's access to U.S. dollar payments and withdrawals was then curtailed. The hack happened even though Bitfinex was securing the funds with BitGo, which uses multiple-signature security.[38]

The United States Department of Justice recovered the stolen Bitcoin,[39] and a New York couple, Ilya Lichtenstein and his wife, Heather Morgan, was federally charged in February 2022 with conspiring to launder the Bitcoin, which was then worth $3.6 billion.[40][41] According to Justice officials, Lichtenstein and Morgan are charged with conspiracy to launder money and conspiracy to defraud the United States.[41] On 10 February 2022, it was reported that Heather Morgan was detained in Manhattan on 8 February 2022 with her husband, Ilya Lichtenstein.[42]

Referring to the 2016 hack, IRS Commissioner Charles Rettig said, "This was also the largest single financial seizure recorded by the federal government."[43]

Their customers' money has been stolen or lost in several incidents, and they have been unable to secure normal banking relationships.[44][45][46] Research suggests that price manipulation of bitcoin on Bitfinex accounted for about half of bitcoin's price increase in late 2017.[47]

iFinex issued the cryptocurrency Unus Sed Leo in 2019. Once the U.S. announced that most of the stolen funds were recovered, Leo's value surged more than 50%. Bitfinex promised to repurchase and burn outstanding LEO tokens within 18 months of the funds’ recovery.[48]

Tether

Main page: Finance:Tether (cryptocurrency)

Tether is a cryptocurrency (a so-called stablecoin) which Tether Limited had claimed to be pegged to the US dollar. Tether is closely associated with Bitfinex, with whom, as of 2018, they shared common shareholders and management.[16] In 2017, critics raised questions about the relationship between Bitfinex and Tether.[12][49][11]

In February 2021, Bitfinex agreed to pay $18.5 million in a settlement with the New York Attorney General's office regarding allegations over Bitfinex parent iFinex making false statements about the backing of Tether and the movement of hundreds of millions of dollars between the two companies to cover up massive losses by Bitfinex in 2017 and 2018.[50] As part of the agreement, Bitfinex will maintain its prohibition on trading activity with New Yorkers.[51]

In 2021, Bitfinex repaid their remaining loan balance to Tether in full.[52]

See also

References

  1. ↑ "Company Overview of iFinex Inc. (BVI)". Bloomberg. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=309312629. 
  2. ↑ 2.0 2.1 Shekhtman, Lonnie (August 3, 2016). "Bitcoin security breaches raise questions about digital currency's future". Christian Science Monitor. http://www.csmonitor.com/Business/new-economy/2016/0803/Bitcoin-security-breaches-raise-questions-about-digital-currency-s-future. 
  3. ↑ "Best Crypto Exchanges For Australians In 2023". 2023-06-05. https://www.forbes.com/advisor/au/investing/cryptocurrency/best-crypto-exchanges-for-australians-in-2023/. 
  4. ↑ Rosenberg, Eric (2021-12-22). "Bitfinex Review". https://www.investopedia.com/bitfinex-review-5213318. 
  5. ↑ 5.0 5.1 "Bitfinex Trading Volume, Stats & News". 2023-04-24. https://www.forbes.com/digital-assets/exchanges/bitfinex/. 
  6. ↑ "Best Crypto Exchanges For Australians In 2023". 2023-04-11. https://www.forbes.com/advisor/au/investing/cryptocurrency/best-crypto-exchanges-for-australians-in-2023/. 
  7. ↑ "Bitcoin security breaches raise questions about digital currency's future". Christian Science Monitor. https://www.csmonitor.com/Business/new-economy/2016/0803/Bitcoin-security-breaches-raise-questions-about-digital-currency-s-future. Retrieved February 6, 2023. 
  8. ↑ Baraniuk, Chris (August 8, 2016). "Bitcoin users 'must pay' for lost coins". BBC News. https://www.bbc.com/news/technology-37009319. 
  9. ↑ Popper, Nathaniel (2017-11-21). "Warning Signs About Another Giant Bitcoin Exchange" (in en-US). The New York Times. ISSN 0362-4331. https://www.nytimes.com/2017/11/21/technology/bitcoin-bitfinex-tether.html. 
  10. ↑ "CFTC Orders Bitcoin Exchange Bitfinex to Pay $75,000 for Offering Illegal Off-Exchange Financed Retail Commodity Transactions and Failing to Register as a Futures Commission Merchant". June 2, 2016. https://www.cftc.gov/PressRoom/PressReleases/pr7380-16. 
  11. ↑ 11.0 11.1 11.2 "Tether Theft Isn't the First Controversy for Cryptocurrency Firm". Bloomberg.com. November 21, 2017. https://www.bloomberg.com/news/articles/2017-11-21/tether-theft-isn-t-the-first-controversy-for-cryptocurrency-firm. 
  12. ↑ 12.0 12.1 Popper, Nathaniel (November 21, 2017). "Warning Signs About Another Giant Bitcoin Exchange". The New York Times. https://www.nytimes.com/2017/11/21/technology/bitcoin-bitfinex-tether.html. 
  13. ↑ Nathaniel, Popper (November 21, 2017). "Warning Signs About Another Giant Bitcoin Exchange". New York Times. https://www.nytimes.com/2017/11/21/technology/bitcoin-bitfinex-tether.html. 
  14. ↑ Katz, Lilly (May 31, 2018). "Bittrex Gets Bank Agreement to Help You Buy Bitcoin With Dollars". Bloomberg. https://www.bloomberg.com/news/articles/2018-05-31/bittrex-gets-bank-agreement-to-help-you-buy-bitcoin-with-dollars. 
  15. ↑ Leising, Matthew; Rivera, Yalixa (October 1, 2018). "Puerto Rico's Noble Bank Seeks Sale Amid Crypto Slide". Bloomberg. https://www.bloomberg.com/news/articles/2018-10-02/puerto-rico-s-cryptocurrency-bank-noble-is-said-to-seek-sale. 
  16. ↑ 16.0 16.1 Irrera, Anna (June 22, 2018). "Bitfinex chief strategy officer departs". Reuters. https://www.reuters.com/article/us-cryptocurrencies-bitfinex/bitfinex-chief-strategy-officer-departs-idUSKBN1JI2IN. 
  17. ↑ Kharif, Olga; Leising, Matthew (October 17, 2018). "Bitcoin Trades at $300 Premium on Controversial Crypto Exchange". Bloomberg. https://www.bloomberg.com/news/articles/2018-10-17/bitcoin-trades-at-300-premium-on-controversial-crypto-exchange. 
  18. ↑ Frankenfield, Jake (2018-05-04). "Tether (USDT): Meaning and Uses for Tethering Crypto Explained". https://www.investopedia.com/terms/t/tether-usdt.asp. 
  19. ↑ 19.0 19.1 "Open-source wants to eat the internet". 2023-05-22. https://www.politico.com/newsletters/digital-future-daily/2023/05/22/open-source-wants-to-eat-the-internet-00098229. 
  20. ↑ "In the Matter of the Inquiry by LETITIA JAMES. : Attorney General of the State of New York.". Supreme Court of the State of New York County of New York. https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=vIexA1b0spKOnK_PLUS_ZUGTJ3A==&system=prod. 
  21. ↑ 21.0 21.1 21.2 Larson, Erik; Leising, Matthew; Kharif, Olga (April 26, 2019). "Crypto Market Roiled by New Allegations Against Tether, Bitfinex". Bloomberg. https://www.bloomberg.com/news/articles/2019-04-25/bitfinex-operator-accused-by-new-york-of-850-million-coverup?srnd=cryptocurrencies. 
  22. ↑ 22.0 22.1 Robinson, Matt; Kharif, Olga; Leising, Matthew (May 3, 2019). "Ex-NFL Owner Said to Be Tied to $850 Million Crypto Mystery". Bloomberg. https://www.bloomberg.com/news/articles/2019-05-03/ex-nfl-owner-is-said-to-have-ties-to-850-million-crypto-mystery. 
  23. ↑ Kharif, Olga (May 9, 2019). "Beleaguered Bitfinex Says Its Crypto Exchange Turns 97% Profit". Bloomberg. https://www.bloomberg.com/news/articles/2019-05-09/beleaguered-bitfinex-says-its-crypto-exchange-turns-97-profit. 
  24. ↑ Lyons, Kim (2021-10-15). "Tether will pay $41 million over "misleading" claims it was fully backed by US dollars" (in en). https://www.theverge.com/2021/10/15/22728253/tether-41-million-misleading-statements-fiat-currency-bitfinex-cftc. 
  25. ↑ Spadafora, Anthony (2021-03-04). "Bitfinex launches system for contactless crypto payments". https://www.techradar.com/news/bitfinex-launches-system-for-contactless-crypto-payments. 
  26. ↑ Mehta, Ivan (2021-06-09). "Kraken and Bitfinex are reportedly exploring ways to enter India". https://thenextweb.com/news/kraken-bitfinex-kucoin-india-crypto-report. 
  27. ↑ Kharif, Olga (2022-09-14). "Crypto Firms Prepare to Pause Activity During Ethereum 'Merge'". https://www.bloomberg.com/news/articles/2022-09-14/crypto-firms-prepare-to-pause-activity-during-ethereum-merge. 
  28. ↑ Engler, s (2023-05-24). "Bitfinex Invests in Chilean Crypto Exchange OrionX to Expand Presence in Latin America - Currency News - Financial and Business News". https://markets.businessinsider.com/news/currencies/bitfinex-invests-in-chilean-crypto-exchange-orionx-to-expand-presence-in-latin-america-1032349067. 
  29. ↑ "Bitfinex Expects El Salvador Volcano Token Issuance This Year". Bloomberg. January 27, 2023. https://www.bloomberg.com/news/articles/2023-01-27/bitfinex-expects-el-salvador-volcano-token-issuance-this-year. 
  30. ↑ McDonald, Michael (2023-04-11). "Crypto Exchange Bitfinex Gets License to Operate in El Salvador". https://news.bloombergtax.com/crypto/crypto-exchange-bitfinex-gets-license-to-operate-in-el-salvador. 
  31. ↑ Oladipupo, Solomon (2023-04-11). "Bitfinex Becomes First Licensed DASP in El Salvador". https://www.financemagnates.com/cryptocurrency/bitfinex-becomes-first-licensed-dasp-in-el-salvador/. 
  32. ↑ Castro, Maolis (2023-05-24). "Bitfinex, de los dueños de Tether, invierte en el exchange cripto chileno Orionx" (in es). https://www.bloomberglinea.com/latinoamerica/chile/bitfinex-de-los-duenos-de-tether-invierte-en-el-exchange-cripto-chileno-orionx/. 
  33. ↑ "Bitfinex comes back from $69 million bitcoin heist". May 21, 2017. http://www.sfgate.com/business/article/Bitfinex-comes-back-from-69-million-bitcoin-heist-11161585.php. 
  34. ↑ 34.0 34.1 Tsang, Amie (August 3, 2016). "Bitcoin Plunges After Hacking of Exchange in Hong Kong". The New York Times. https://www.nytimes.com/2016/08/04/business/dealbook/bitcoin-bitfinex-hacked.html. 
  35. ↑ "Bitcoin Worth $72M Was Stolen in Bitfinex Exchange Hack in Hong Kong". http://fortune.com/2016/08/03/bitcoin-stolen-bitfinex-hack-hong-kong/. 
  36. ↑ Baldwin, Clare (August 6, 2016). "Bitfinex exchange customers to get 36 percent haircut, debt token". Reuters. https://www.reuters.com/article/us-bitfinex-hacked-hongkong/bitfinex-exchange-customers-to-get-36-percent-haircut-debt-token-idUSKCN10I06H. 
  37. ↑ Kharif, Olga (2022-02-08). "Bitfinex Cryptocurrency Linked to 2016 Hack Surges 59% After Fund Recovery". https://www.bloomberg.com/news/articles/2022-02-08/cryptocurrency-of-hacked-exchange-surges-59-after-fund-recovery. 
  38. ↑ "Bitcoin worth $72 million stolen from Bitfinex exchange in Hong Kong" (in en). Reuters. 2016-08-03. https://www.reuters.com/article/us-bitfinex-hacked-hongkong-idUSKCN10E0KP. 
  39. ↑ Mozée, Carla (2022-02-09). "US stocks extend rally into second day with Fed official seeing the US at the 'cusp' of easing inflation". https://markets.businessinsider.com/news/stocks/stock-market-news-rally-continues-atlanta-fed-bostic-inflation-easing-2022-2. 
  40. ↑ Barrett, Devlin (February 8, 2022). "Feds arrest couple, seize $3.6 billion in hacked bitcoin funds". The Washington Post. https://www.washingtonpost.com/national-security/2022/02/08/bitfinex-hack-bitcoin-arrests/. 
  41. ↑ 41.0 41.1 Lyngaas, Sean (February 8, 2022). "Feds arrest a New York couple and seize $3.6 billion in stolen cryptocurrency". CNN News: p. 1. https://edition.cnn.com/2022/02/08/investing/cryptocurrency-laundering/index.html. 
  42. ↑ Farrer, Martin (February 10, 2022). "'Sexy horror comedy': Bitcoin laundering suspect is also 'raunchy rapper' Razzlekhan". The Guardian News: pp. 1. https://www.theguardian.com/technology/2022/feb/10/sexy-horror-comedy-bitcoin-laundering-suspect-is-also-raunchy-rapper-razzlekhan. 
  43. ↑ "IRS Statement — IRS Commissioner Charles Rettig's final message". Internal Revenue Service. https://www.irs.gov/newsroom/irs-statement-irs-commissioner-charles-rettigs-final-message. 
  44. ↑ Kaminska, Izabella (April 26, 2019). "We all become MF Global eventually, Tether edition". Financial Times. https://ftalphaville.ft.com/2019/04/26/1556291388000/We-all-become-MF-Global-eventually--Tether-edition/. 
  45. ↑ Lee, Timothy B. (April 29, 2019). "The leading "stablecoin" is no longer backed by $1 for every coin". Ars Technica. https://arstechnica.com/tech-policy/2019/04/how-a-major-cryptocurrency-exchange-lost-control-of-851-million/. 
  46. ↑ Vigna, Paul (May 17, 2019). "Lack of Banking Options a Big Problem for Crypto Businesses". Wall Street Journal. https://www.wsj.com/articles/lack-of-banking-options-a-big-problem-for-crypto-businesses-11558092600. 
  47. ↑ Popper, Nathaniel (June 13, 2018). "Bitcoin's Price Was Artificially Inflated Last Year, Researchers Say". New York Times. https://www.nytimes.com/2018/06/13/technology/bitcoin-price-manipulation.html. 
  48. ↑ Kharif, Olga (2022-02-08). "Bitfinex Cryptocurrency Linked to 2016 Hack Surges 59% After Fund Recovery". https://www.bloomberg.com/news/articles/2022-02-08/cryptocurrency-of-hacked-exchange-surges-59-after-fund-recovery. 
  49. ↑ "Crypto-currency company reports $31m raid". BBC News. November 21, 2017. https://www.bbc.com/news/technology-42065724. 
  50. ↑ Browne, Ryan (2021-02-23). "Cryptocurrency firms Tether and Bitfinex agree to pay $18.5 million fine to end New York probe" (in en). https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-settlement-with-new-york-attorney-general.html. 
  51. ↑ "Bitfinex Settles New York Probe Into Tether, Hiding Losses," Bloomberg, February 23, 2021.
  52. ↑ "Bitfinex Says It Repaid Tether for $550M Loan at Center of NYAG Probe". 2021-02-05. https://www.nasdaq.com/articles/bitfinex-says-it-repaid-tether-for-%24550m-loan-at-center-of-nyag-probe-2021-02-05. 

External links



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