Is Bitfinex a Mt. Gox in the Making?

There seems to have been a stir caused in traders on the Bitfinex platform due to an ongoing investigation into Finex Inc.

A growing number o fusers have reported issues with withdrawing funds from the platform. On top of this, around $430 million worth of Bitcoin and Ethereum have excited the exchange’s cold wallets.

Stuck on the Exchange

At the end of April, the attorney general of the State of New York, Letitia James, disclosed that it had obtained a court order against iFinex Inc., which is the parent company that operates Bitfinex and owns Tether Ltd for those that don’t know. The court order against the company was for engaging in a cover-up to hide the apparent loss of $850 million. So even though the company is being investigated for fraudulent activity, it was ordered to cease further dissipation of the US dollar asset which backs the Tether stablecoin.

As reported by CryptoSlate:

“Tether holders seem to be cashing out into other cryptocurrencies such as bitcoin, ether, and other stablecoins as they try to leave the exchange. While this has not been confirmed, it can be observed through premium prices on the platform against other exchanges (which has led CoinMarketCap to exclude the exchange’s price data from its site).”

Mt. Gox

The signs that the market was signalling before Mt. Gox blew up, are similar to those that are apparent today. Rumours are on the rise in regards to the legality of the actions taken by iFinex Inc. not only was a court order obtained by the attorney general of the State of New York against Bitfinex, but there are a lot of people linked to the exchange that have had to face the music.

The funds on Bitfinex remain confiscated by government authorities and there is an increasing number of users are trying to save their funds from the exchange during this time.

History is known for repeating itself and perhaps this could be the Mt. Gox disaster all over again. Although things can change, so if Bitfinex is able to raise the $1 billion it needs to stay afloat then it could avoid sinking down the likes of Mt. Gox...