Bitfinex fiat deposits are back, and they’re pretty weird

Posted: 17 October 2018 7:05 pm
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Is this what they mean when they say cryptocurrency will change how people do banking?

Bitfinex disabled its fiat deposits on 12 October, causing a lot of concern in the cryptocurrency community. Reports say this was because Bitfinex was using an under-the-radar account at HSBC, and when HSBC discovered it, the bank closed the account. A similar thing may have happened to Bitfinex's previous banking arrangements with Wells Fargo.

When Bitfinex cancelled fiat deposits last week, it said it anticipated a new solution within a week. As it turns out, it might have been right on the money.

"Today we are introducing a new, improved and increasingly resilient fiat depositing system for sending fiat currencies to Bitfinex," it announced today.

"This new process will once again allow KYC-verified users from around the world to initiate deposits across USD, GBP, JPY and EUR. We believe this system to be significantly more durable in the face of sustained attacks by our competition and their supporters. Ongoing campaigns against us will only result in our company becoming stronger and better."

So what does Bitfinex's more durable system look like? In a word, it looks weird.

Word on the block

The new instructions for making a fiat deposit are unusual.

Step one is for KYC-verified users to "create a deposit request to signal interest in completing a deposit." This indication of interest will specify the exact amount and currency type (USD, GBP, JPY or EUR) that they wish to deposit.

Step two is for Bitfinex to conduct an account review, which may take up to 48 hours.

Step three is for an approved user to receive a deposit notification which will include, among other things, bank details specific to the particular transaction that the user expressed interest in.

Some people are speculating that this procedure is shady enough to qualify as a suspicious transaction, which would make reporting mandatory in some cases.

Even weirder is the vaguely threatening message customers apparently receive when they want to make a deposit.

Image taken from here.

The full text is:

"This banking information is being provided to you for purposes of contributing good faith funding to your account on Bitfinex. At all times you are subject to our Terms of Service. This banking information is commercially sensitive and confidential. You should be very careful with this information. You are asked to keep this information to yourself and to not share it except with your financial institution. Divulging this information could damage not just yourself and Bitfinex, but the entire digital token ecosystem. Accordingly, you are cautioned that there may be serious negative effects associated with this information becoming public. Pursuant to the Terms of Service, Bitfinex is not liable or responsible for the actions of third parties."

According to The Block, Bitfinex is now with the Hong Kong-based Bank of Communications, through a private account of Prosperity Revenue Merchandising Limited, utilising Citibank as the intermediary bank for US dollar wire transfers.

It's not clear whether Citibank knows it's processing wire transfers for Bitfinex, The Block says. At the same time, it has also reported that Tether has found a new bank in the Bahamas, and they are now banking with Deltec Bank.

These are strange times for Bitfinex. Its game of financial musical chairs isn't over yet.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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