Bitfinex Reinstates USD Deposits and Withdrawals, Still Causes Doubts

Bitfinex revamps and returns to the US market with added BTC/EUR trading pairs to boot. But how will the Tethers story unroll, and can Bitfinex still serve as the largest settlement platform?

Bitfinex has opened USD deposits and withdrawals once again, and has introduced a live BTC/EUR trading pair, and is thus back in business for US customers just days after the USDT hack.

Bitfinex handles around 11% of the current Bitcoin trading volume, and at the moment, the leading crypto asset trades at a premium, at $8,216.50, compared to the Bittrex price of 7,741.06. While such anomalies are common, the price of Bitcoin on Bitfinex may have a spillover effect to other markets.

The exchange also stated it would speed up withdrawals in dollars as it fills up its hot wallets to clear the backlog. At the same time, wire transfers of USD and Euro (EUR) should be available soon. The opening of the exchange for new funding coincides with increased scrutiny on the usage of Tethers in trading.

Bitfinex, for now, claims it is solvent and has no problems with payouts.

However, according to sources, the account holder related to Bitfinex is not the company itself, but a third entity with relations to a Polish bank.

The same organization, Crypto.SP.ZO.O, has been linked to providing withdrawal services for CEX.IO, which has also seen withdrawal problems in the past days, as this Reddit thread shows.

But for investors, Bitfinex is still causing doubts, citing overly close connections between the Bitfinex and Tether projects. The Bitfinex CSO Philip Potter is also listed as the director of Tether Holdings Limited, per the recent leak in the Paradise Papers.

At the same time, Bitfinex offers enough agility and financial innovation to keep its top position even after a significant theft of funds in 2016. And yet the bailout depended on the influx of new customers to inject fiat funds into the newly issued Bitfinex token assets and make the market liquid and backed by value.

But it is precisely this innovation and heated trading that has made analysts see Bitfinex as potentially becoming the next Mt. Gox, where a lot of Bitcoin activity was also concentrated in disproportion before the crash. For now, there are enough supporters of Bitfinex, but time will tell if this arrangement survives, as exchanges have been some of the most fragile elements in the cryptocurrency ecosystem.