Bitfinex: ‘Business as Usual’ Following $75k US Fine


Bitfinex: ‘Business as Usual’ Following $75k US Fine

Hong Kong exchange Bitfinex has said it will be “business as usual” after being fined $75,000 by the US Commodity Futures Trading Commission (CFTC).

Also read: Banks Want to Turn Off Bitcoin as a ‘Public Utility’ for Money

Bitfinex ‘Involved in Below-Board Practices’

bitfinex1-1900x700_cThe results of the CFTC inquiry, published Thursday in a press release, state that the fine was imposed on Bitfinex “for offering illegal off-exchange financed retail commodity transactions in bitcoin and other cryptocurrencies, and for failing to register as a Futures Commission Merchant (FCM) as required by the Commodity Exchange Act (CEA).”

Specifically, the release reads, Bitfinex was found to be involved in below-board practices “from April 2013 to at least February 2016”.

These were defined as “[permitting] users to borrow funds from other users on the platform in order to trade bitcoins on a leveraged, margined, or financed basis… not actually [delivering] those bitcoins to the traders who purchased them… [and holding] the bitcoins in deposit wallets that it owned and controlled”.

The exchange was also investigated for “[accepting] orders and received funds in connection with retail commodity transactions without being registered with the CFTC as an FCM”.

‘Neither Admit Nor Deny’

Following the results being made public, both Bitfinex’s Director of Community & Product Development Zane Tackett and Head of Applications Drew were quick to respond to a quizzing on Reddit. Drew stated:

We see this announcement as a good thing because it means we’ve had an in-depth dialog and have reached a settlement with the CFTC […] We’re pleased with the results, and it’s business as usual, including for U.S. customers, which is the CFTC’s area of concern.

A blog post on Bitfinex reiterates that the exchange “proactively contacted the CFTC in September 2015—before the CFTC announced enforcement action involving bitcoin trading platforms—to provide information about Bitfinex related to a potential investigation”.

cfctIt also points to the wording of the CFTC order itself, which states that “Bitfinex’s cooperation with the Commission’s investigation was significant.”

Tackett however remained less decisive.

“We neither admit nor deny the CFTC findings in the order and settlement, which contains alleged violations of the U.S. Commodity Exchange Act (the Act),” he wrote.

Bitfinex’s woes do not seem limited to the legislatory realm. Potentially as a result of the findings, fellow exchange Huobi announced it had overtaken Bitfinex to become the most popular platform for BTC/USD trades.

“At the time of writing, the company was responsible for more than one in three trades on the BTC/USD trading market. Bitfinex, on the other hand, only completed one in four trades in this segment,” Huobi reported Thursday.

What do you think about Bitfinex’s practices and its handling of the situation? Let us know in the comments below! 

Tags in this story
Bitcoin regulation, BitFinex, CFTC, Huobi

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William Suberg

William Suberg is a freelance digital tech journalist who has written extensively about Bitcoin, the blockchain and the evolving cryptocurrency ecosystem for a variety of publications. He has been writing for since January 2016.

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