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Bitfinex pauses USD deposits after Bitcoin [BTC] drops: $2.3 billion at stake as insolvency rumors threaten USDT legitimacy

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Reportedly, Bitfinex, a prominent cryptocurrency exchange, has paused USD deposits to their exchange. This comes after last week’s various rumors that the exchange was insolvent, which led the management to release a statement stating that they were not.

The exchange has come under scrutiny for the wide use of USD Tether stablecoin. There have not been any transparent audits that proves that the coin is actually backed by USD. This also presents a grave situation for the market, as over $2.6 billion is in the form of USDT.

The Block, a cryptocurrency news reporting portal, revealed earlier today that the exchange has paused all of their deposits for USD. They also stated that they “expect the situation to normalize within a week”. The same portal also reported on their new partnership with HSBC Bank, after reports emerged of their previous banking partner finding difficulties to run.

Bitfinex mentioned in their blog post:

“Complications continue to exist for us in the domain of fiat transactions, as they do for most cryptocurrency-related organisations. However, we continue to do our utmost to minimise any waiting times associated with fiat deposits and withdrawals.”

As their bank account is a private one registered under the name “Global Trading Solutions”, it was not clear whether HSBC bank knew that the exchange was banking with them. The Block stated:

“Now it appears that the private account is no longer functional. Bitfinex currently has no active method of deposits as all USD, EUR, JPY and GBP deposits are paused.”

This is in direct contrast to what Bitfinex mentioned in their post detailing why they were not insolvent. They had stated:

“Verified Bitfinex users can freely withdraw Euros, Japanese Yen, Pounds Sterling and U.S. Dollars.”

Users on Twitter also seem to be reporting the issue, with USD withdrawals currently being paused for many. Speculation also ensued that the recent drop in the price of Bitcoin was due to the rumours of the withdrawals being stopped.

The error message shown to users when they try to deposit USD states:

“USD Wire Deposits Temporarily Paused. We expect the situation to normalize within a week. We apologize for the incoveniences.”

The post Bitfinex pauses USD deposits after Bitcoin [BTC] drops: $2.3 billion at stake as insolvency rumors threaten USDT legitimacy appeared first on AMBCrypto.