Bitfinex Exchange Bans USA-Based Bitcoin Customers – But Why?
In a blog post from earlier this week, cryptocurrency exchange Bitfinex confirmed that it will block all American customers from November 9.
The move is made to safeguard the exchange against regulatory uncertainty. It’s not exactly a surprise: Bitfinex already prohibits US users from becoming verified on its platform. Earlier this year, they also stopped USD withdrawals.
However, now, the world’s second highest-volume cryptocurrency exchange is recommending that US customers remove all hosted tokens from the platform.
On August 11, Bitfinex announced plans to terminate its business with individual US customers. Now, with their October 16 update, they’re terminating all account features and functions for those US customers:
“As indicated in the announcement, we are terminating trading, deposits, and withdrawal functionality for U.S. individual customers by no later than November 9, 2017. U.S. customers are already barred from receiving financing from other users on Bitfinex’s peer-to-peer financing platform. This restriction will remain and, in addition, U.S. individual customers will no longer be able to provide financing on Bitfinex effective November 9, 2017.”
The exchange encourages all individual US users to make arrangement to withdraw their digital tokens by November 9.
This follows an announcement from April 2017 when Bitfinex announced that it was no longer able to let users withdraw their funds in USD. This announcement occurred after Wells Fargo placed limitations on its wire transfers – a decision that led Bitfinex to sue Wells Fargo a few days later.
Meanwhile, some US individuals hold Recovery Right Tokens, which relate to the exchange of the now-defunct BFX tokens, which were sold as equity in iFinex Inc. If you hold RRTs, you can, starting on October 27, 2017, sell your RRTs on the exchange. US customers are not allowed to purchase RRTs during this time period.
BFX tokens were made after the 2016 Bitfinex hack, during which $72 million of bitcoin was stolen from customers’ accounts.
Any RRTs remaining in the hands of US individual verified customers after the November 9 deadline may be sold through Bitfinex on an OTC basis, or through special arrangements with the exchange.
About iFinex Inc.
iFinex Inc. was founded in 2012 and is based in Hong Kong. The company is best known for running the Bitfinex cryptocurrency exchange.
In terms of 24 hour trading volume, Bitfinex regularly sits in the top 1 or 2 position on Coinmarketcap in terms of 24 hour trading volume. As of October 18, it’s approximately $100 million USD behind Bithumb in terms of 24 hour trading volume, and significantly ahead of Bittrex, Coinone, HitBTC, and other exchanges.
Could Other Exchanges Ban Americans Too?
Other exchanges will likely make similar announcements in the near future. Bittrex is another major exchange that may be seeking to disable trading activity for Americans.
Fortunately, these changes aren’t occurring in response to specific US regulatory changes. Instead, they’re occurring in anticipation of changes – which is why these exchanges can offer a few weeks of warning before disabling activity.
In any case, if you’re an American user on Bitfinex, it’s time to withdraw everything from the platform.