Bitfinex’s Wire Transfer Woes Leave Users Wanting
On April 17, 2017, Bitfinex posted the following announcement on its website:
"Beginning April 18, 2017, all incoming wires to Bitfinex will be blocked and refused by our Taiwan banks. This applies to all fiat currencies at the present time. Accordingly, we ask customers to avoid sending incoming wires to us until further notice, effective immediately."
While assuring that progress is being made for users who wish to withdraw fiat currency, Bitfinex's announcement divulges little detail about what those options will be and when they will be made available.
It’s possible that users will only have a few choices: to divest into other forms of cryptocurrency and possibly take a small loss, or ride out the wave and wait until a new form of fiat currency withdrawal is available. It remains unclear as to whether Bitfinex voluntarily halted all incoming wires or was forced to do so, and this uncertainty is not good for investors who are watching their capital closely.
April has not been an easy month for Bitfinex. On April 5, it and its sister company Tether filed a complaint against Wells Fargo, claiming that Wells Fargo intentionally disrupted their ability to send wire transfers “without justification.” In particular, Bitfinex and Tether alleged that Wells Fargo froze wire transfers from their accounts with four Taiwanese banks, First Commercial Bank, Hwatai Commercial Bank, KGI Bank, and Taishin Bank, and caused Bitfinex to suffer damages. However, less than a week later, on April 11, Bitfinex attorneys voluntarily dismissed the case.
On April 7, Bitfinex tweeted:
We do not bank with Wells Fargo; they serve as a correspondent bank only. Funds are not frozen. This isn't a regulatory action.— Bitfinex.com (@bitfinex) April 7, 2017
Also, possibly in an attempt to assuage any concerns its customers may have over legal issues, Bitfinex tweeted:
Every Bitfinex user’s deposit is always held on deposit in our regulated financial institutions, dollar for dollar.— Bitfinex.com (@bitfinex) April 11, 2017
Tether is also swimming in waters of ambiguity regarding the liquidity of the assets it offers, meaning users may wish to be wary. Tether offers an exchange service for fiat currency into its cryptocurrency Tethers (USDT), but its website's terms of service explicitly state that the company has no legal obligation to redeem or exchange USDT for fiat currency:
"PURCHASE AND REDEMPTION OF TETHERS: The Site is an environment for the purchase and redemption of Tethers. Once you have Tethers, you can trade them, keep them, or use them to pay persons that will accept your Tethers. However, Tethers are not money and are not monetary instruments. They are also not stored value or currency.
There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers."
Time will tell if a swift solution saves Bitfinex from further financial frailty.