Bitfinex Crypto Exchange Issues Insolvency Claim Response, But Still Provides No Evidence
Bitfinex Responds to Rumours Claiming that the Exchange is ‘Facing Insolvency’
Over the past month or so, rumours had been circulating over the internet claiming that Bitfinex Responds to Rumours Claiming that the Exchange is ‘Facing Insolvency’ and its affiliated firm Tether were facing insolvency due to the their banking partner, Noble International, no longer possessing the financial capacity to work with them.
Some of the aforementioned rumours gained even more traction when Bloomberg posted a news piece stating:
“Noble Bank International, the Puerto Rican financial services firm with clients that have included prominent cryptocurrency ventures, is looking for a buyer, according to a person with direct knowledge of the situation… The bank has lost many of its customers, including Bitfinex and Tether, and is no longer profitable. “
BitFinex’s Recent Banking History
While many of the stories surrounding Bitfinex at the moment may not be true, it is worth noting that the firm has had a long history of failed relationships with many different banking institutions in the past.
For example, early in 2017, Bitfinex’s relationship with Wells Fargo ended abruptly, following which the firm teamed up with Noble International. However, now that this relationship too seems to be heading south, there are reports already circulating that claim Bitfinex is on the verge of striking up a deal with HSBC sometime soon.
Even though a flurry of “unverified accounts” have been bombarding Medium with posts linking Noble International’s “internal issues with Bitfinex”, the company’s executive brass has now come forth and thrown some light of its own on the matter stating:
“Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this.”
The firm then released another statement which read:
“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,”
The point of this entire exercise was for Bitfinex to make it clear that any problems currently being incurred by Noble International did not have any impact on their regular operations, survivability, or solvency.
Over the past couple of years, Bitfinex’s banking relationships have been the subject of a lot of scrutiny— particularly because of the firm’s close association with Tether. The two entities are known to share common management teams and investors, with much of Bitfinex’s daily transaction load being facilitated via Tether.
Lastly, there have also been questions raised about Tether and whether the stablecoin is fully collateralized (especially since the Tether team has been extremely reluctant to release fully transparent audits of their firm in the past).