Earlier today an article from the Cointelegraph as stirred up the crypto community quite considerably. The article entitled ‘Bitfinex Struggles with Money Withdrawal, Community Observers Predict MtGox Scenario’ is based upon speculation and concerns from within the crypto community, however at this point in time they are merely just concerns and speculative discussions between users of the platform.
If we condemned a cryptocurrency trading platform everytime are withdrawals were held or stopped then we’d have no trading platforms left (except for maybe Bitstamp which seems to have the most transparent and reliable platform going). Here’s the opening statement from the article:
Several observers from the Bitfinex community are pointing out severe problems with money withdrawal on the exchange, which might lead to it becoming “the next MtGox”. The risk may be related to the connection between Tether and Bitfinex and the concerns regarding redacted information that would normally be included in an audit.
The main source of the article is derived from post in particular on medium entitled ‘The Mystery of The Bitfinex/Tether bank, and why this is suspicious’ . The article from a user called bitfinexed,the post looks at the lack of transparency of the Tether token and how any auditing performed has been suspicious to say the least. Now, it cannot be argued that the Tether token is dubious to say the least.
The question of just how ‘backed by the dollar’ it really is has been circulating for quite some time now. However, as you can imagine the article has started a twitter storm and likely a withdrawal storm for Bitfinex as customers begin panicking about the safety of their crypto. But the problem here is that this very article is it all it takes to close down a Crypto trading platform, we need to be very careful when publically making damning statements about the like’s of Bitfinex and other similar platforms. Such claims can literally cause the very effect that is being suggested.
Bitfinex have responded on twitter with the following two tweets:
Now i’m not so sure it’s a coordinated attack as they are suggesting, likely it is just sensational reporting from Cointelegraph and the usual armies of disgruntled traders that have had bad experiences using said platform in recent days, weeks or months. We’ve all been there, withdrawal withheld, support tickets ignored and so you begin to question the safety of your assets.
Should you be concerned
Well, no more than usual. It’s NEVER a good time to keep money on exchanges, we always suggest do your trades then get out as soon as you can to a safe and secure wallet, one where you hold the private key. Personally I use a Ledger Nano S, these are perfect for just about any major Cryptocurrency and are probably the safest on the market. Exchanges are always a risky place to hold your cryptocurrency, especially in the long term.
Alternatively you can always start using a decentralised Cryptocurrency Exchange, where you can trade your crypto straight from private keys held on your PC. But thats a topic for another post.
Bitfinex in our opinion was no more at risk than Poloniex or Bittrex, or any of the other platforms out there. Be sensible, be cautious and don’t hold your long term portfolio holdings on any exchange. Simple as that. But at the moment, following this recent post from Bitfinexed which was then given more traction by Cointelegraph the risk of issues at Bitfinex has increased. Who doesn’t want to withdraw their crypto right now from Bitfinex, even if you don’t believe there is an issue, we all want to ensure our funds are safe.
Has Bitfinex Been Bitfinexed
Well after this recent stir in the community the risks have increased astronomically of issues arising at Bitfinex, although we cannot confirm as such it would be inevitable that at this moment in time there are huge amounts of withdrawals taking place on the platform, it is also likely that there servers may not be able to handle this increased demand. It is also likely that due to the increased withdrawal demand more security flags will be placed upon accounts and therefore many withdrawals may end up on hold, which then in turn perpetuates the panic.
Hopefully, it’ll blow over and people will relax. The best thing that could happen would be for Bitfinex to be able to produce something which would sooth the naysayers and critics of Bitfinex and the Tether Token.
In the meantime, keep that crypto safe!