Bitfinex Withdraws $89 Million From Cold Wallet Amid US Attorney General Accusations and User Withdrawals
Bitfinex has not yet publicly given a reason for the withdrawals of the funds. The exchange is owned by Hong Kong-based iFinex, which is also the owner of the U.S. dollar-pegged stablecoin, Tether (USDT). Both companies have faced considerable scrutiny in the past, perhaps most notably from the Twitter account, Bitfinex’ed, whose owner believes Tether is not backed 1:1 by U.S. dollars like it claims to be.
According to crypto transaction monitoring resource Whale Alert, over the past day, Bitfinex has moved significant amounts of Bitcoin (BTC) and Ether (ETH) — about 20% of its holdings of the two coins — from its wallets to yet-unknown addresses, in addition to smaller amounts of altcoins like Makerdao (MKR).
This move comes in the midst of a court filing published two days ago in which, Letitia James, the United States Attorney General in New York, accused iFinex of covering a reported $850 million funding gap with U.S. dollars earmarked to back Tether. This battle between the U.S. Attorney General and Bitfinex began with an agreement the company made with payment gateway Crypto Capital in 2018. Crypto Capital was meant to handle user withdrawals, but instead it appeared to hold the funds, and Bitfinex has yet to retrieve them.
However, Bitfinex has publicly renounced the accusations, saying:
“The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million ‘loss’ at Crypto Capital… On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded. We are and have been actively working to exercise our rights and remedies and get those funds released.”
Still, the company’s withdrawals coincide with users beginning to remove funds from the exchange, seemingly out of fear of negative developments. United Kingdom-based entrepreneur Alistair Milne is reported to have withdrawn roughly $1 million worth of crypto.