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Bitfinex To Terminate US Operations By Nov 9

By

Adam

Reese

WriterETHNews.com

The Hong Kong-based cryptocurrency exchange Bitfinex has announced that it will halt its US activity by November 9.

On October 16, the Hong Kongese cryptocurrency exchange Bitfinex announced that it would stop allowing US customers to transact all trades, deposits, and withdrawals by November 9. The exchange recommends that its US-based clients withdraw all their holdings by that date. 

The press release cites an August 11 announcement that forecast the move and detailed steps that the exchange planned to take toward winding down its US operations, including an immediate halt on new verification requests, which must be processed and completed before US-based individuals can trade on the exchange. That statement indicates that the travails of complying with cumbersome regulations motivated the firm’s decision to exit the US market, explaining that a “small percentage of our revenues come from verified U.S. individual accounts while a dramatically outsized portion of our resources goes into servicing the needs of U.S. individuals, including … regulatory.” In light of these challenges and in anticipation of more stringent future regulations, Bitfinex’s operators decided to leave the US marketplace to US-based exchanges, which they say are “better positioned to properly service” American clients. 

The initial notice also reported that by mid-August, US customers would no longer be allowed to trade ERC20 tokens issued through token offerings on the exchange, though it clarified that this move should not be read as a suggestion that ERC20 tokens meet the definition of securities under US law. 

On August 2, 2016, Bitfinex was hacked to the tune of 119,756 bitcoin, worth approximately $70 million at the time. In an effort to rectify the financial harm done to its clients, it generalized the losses across all accounts, reducing their holdings by approximately 36 percent, and then compensated those account holders for the missing balance by depositing tokens known as BFX. These digital assets were intended to “remain outstanding until repaid in full by Bitfinex or exchanged for shares of iFinex Inc.,” the exchange’s parent company. By April 3, 2017, all BFX tokens had been either “converted to equity or redeemed,” but Recovery Right Tokens (RRTs), which had been issued in order to incentivize BFX holders to convert to equity, remain in circulation. Bitfinex’s October press release explains that, starting on October 27, US clients will be permitted to sell all of their RRTs on the exchange, and that if they continue to hold the tokens after the November 9 deadline, Bitfinex will allow them to unload these assets through specially arranged over-the-counter sales.

Among the challenges that the exchange faced in the US was a $75,000 fine levied by the Commodity Futures Trading Commission (CFTC) for offering illegal off-exchange financed retail commodity transactions and failing to register as a CFTC merchant. 

Adam Reese

Adam Reese is a Los Angeles-based writer interested in technology, domestic and international politics, social issues, infrastructure and the arts. Adam is a full-time staff writer for ETHNews and holds value in Ether.

ETHNews is commited to its Editorial Policy

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