Being the largest online BTC exchange by the available USD volume, Bitfinex gave rise to fears and concerns among its numerous users, having announced its temporary inability to accept any electronic funds transfers. A week before this news was published, the exchange confirmed it was experiencing issues and delays related to withdrawing money in USD. The user community is shaken by the grievous announcement; concern shave been voiced Bitfinex is going down the path of Mt Gox.
Specifically, the statement published by Bitfinex read as follows, “Starting 04/18, our Taiwan banks block and refuse any electronic funds transfers in fiat currencies.” No details regarding the banks’ refusal to accept wires have been specified, though. Worth recalling, earlier the exchange already had disputes with the partner banking structures regarding wire transfers of the outbound direction. Unable to resolve the matters amiably, the company even filed a suit against them, but withdrew it several days later. Of course, the exchange promises to find a solution to the current issues as soon as possible.
According to some observers of the market of digital currencies, such a situation rightfully gives rise to concerns. According to the expert opinion of Jacob Eliosoff, the managing director of a crypto-currency fund, the developing situation may cause an abnormal market pressure resulting from the frozen withdrawals.
He stated, “Back in the day, Mt Gox demonstrated similar issues related to withdrawals of the government-issued currencies. Naturally, most investors rushed to restore their withdrawing opportunities by converting their funds to BTC. This resulted in a significant surge in the Bitcoin price at the exchange platform.”
According to Eliosoff, the situation offers an arbitrage opportunity. Some market observers will surely use it to their advantage and gain big profits by selling their BTC at the current higher prices at Bitfinex and then buying it back elsewhere.
Head of CryptoCompare Charles Hayter holds a similar opinion regarding the possible scenarios. He said, “Bitfinex is experiencing withdrawal issues, and so some user are panicking and rushing to withdraw their digital coins through any means possible.”
The problematic situation has resulted in a major difference between the BTC exchange rate on Bitfinex and other online exchanges. For example, the exchange spread was over $50 per unit in comparison with the BTC price on Bitstamp, and over $45 as compared to the exchange rates on GDAX. This is another similarity to Mt Gox, which was trading Bitcoins 10-26 percent above the competitors during its last days.
Although many expert analysts are concerned with the present situation at Bitfinex, most of them firmly believe the exchange will manage to resolve all the issues. They recall that in the past Bitfinex already faced major problems but extricated itself eventually. In August 2016, the exchange was hacked and lost almost$65 million of its customers’ funds. However, it avoided bankruptcy in a creative way, by crediting its customers with a newly-developed cryptographic token.
Hayter and Eliosoff emphasize the solid reputation of Bitfinex, stating their hopes the exchange will resolve the issues quickly and professionally.