Problems Bitfinex: avalanches of tokens and manipulating the Tether

The last days the views of the members of the community were fixed on Bitfinex as a DDoS-attack on the stock exchange provoked the collapse of prices on some altcoins. In addition, a quarterly report to the shareholders of the company, indicating that Bitfinex is one of the main companies buying Tether, leaked to the network.

The collapse of tokens

On 29 November he failed in trade some tokens on Bitfinex. Token Metaverse (ETP) has lost more than 98% of the price in dollars per minute. ETP immediately recovered after the collapse, however, continued to demonstrate the uncertain position that led to a secondary drop — up to 60% of the cost in less than ten minutes. NEO
experienced a similar collapse, losing almost 90% of the cost in less than five minutes, while OMG
lost more than 60% of the price in less than five minutes.

Although since then most markets have recovered, many traders complained that they lost money as a result of sharp fluctuations in prices. Brett Kruger (Brett Kruger), a customer of the exchange, told Business Insider that the exchange «lag» and «hang up» during falling prices. He claims that technical difficulties do not give traders the opportunity to respond and to manage their positions, which in some cases led to the execution of orders at much lower prices than those set by the user.

The collapse of prices occurred just a few days after the exchange was hit by a major DDoS attack. The attack forced Bitfinex to stop working a little less than an hour, accompanied by a short-term fall in the price of bitcoin below $ 11 000. During the attack, the exchange has stopped working, explaining why in his Twitter:

«The reason for DDoS attack. Person or group of people deliberately trying to bring the platform down».

History of Tether

Recently leaked to the network a quarterly report for shareholders Bitfinex strengthened the already close attention to the relationship between Bitfinex and Tether. The report says that «since April, the vast majority of all editions of the Tether is through Bitfinex […] Because Bitfinex and Tether have a common creators and banking, no limit on time or amount of money that can be transferred between companies, even if the incoming and outgoing Bank transfers customers are limited.

Bitfinex usually holds less than 20M Tether for withdrawal by customers. When this balance is close to zero, Bitfinex moves money (typically $ 20 million) from their Bank account to the Bank account of the Tether in the same Bank to purchase additional Tether from Tether Limited. When this happens, the money is removed from the balance Bitfinex and added to the balance Tether».

The report asserts that because of «ongoing issue Tether is a […] demand from the verified customers.» The report also says that «Bitfinex just acts as an aggregator of customer requirements for mass creation and acquisition of Tether». In addition, the paper argues that the creation of USDT «has nothing to do with dollar lending market,» — referring to the assumption that many of the recently released Tether was used to Finance margin trading on the exchange.

Due to the fact that the company has still not provided evidence of related operations banking partners agreeing to provide such information to the media under the condition of signing non-disclosure agreements, many traders continue to Express skepticism about the operations Bitfinex and Tether.

Poured oil on the fire and the recently widespread discussion
on Bitcointalk, dated 2014. It is the man who is the financial Director of the exchange — Devasena Giancarlo (Giancarlo Devasini), called the affected client Bitfinex «brake» and issued the balance of his account. Such statements made more consumers question the professionalism and adequacy of the management of the exchange.

Also this week, Bitfinex announced that sues the user Bitfinex’ed, which in recent months have raised suspicions of «grey» schemes of work of the exchange, as well as the insufficient security tokens Tether.

All of these events, including numerous user complaints on the withdrawal cryptocurrency exchange, has not yet spoken directly about the exchange’s problems with liquidity or solvency, but it may be an echo of the internal processes, while inaccessible to an outside observer.

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