Bitfinex has published an update describing its recent freeze on fiat deposits and has partially explained why it took this course of action. “Processing complications” are apparently to blame for the outage, and the exchange has announced an imminent fix.
The service outage affected users of several fiat currencies, including US Dollars, British Pounds, Japanese Yen, and Euros. This problem prevented countless Bitfinex investors from trading on the exchange for several days. This resulted in a public outcry, although Bitfinex is reminding its critics that fiat withdrawals remained active throughout the incident.
Bitfinex’s announcement also assures users that fiat deposits will be functional again by Tuesday; an “increasingly robust” wallet system will be implemented beginning tomorrow.
The deposit freeze was preceded by rumors that Bitfinex is suffering from insolvency. Some have suggested that Bitfinex’s breakaway from its reserve bank, Noble Bank International, may be also impacting its services. However, the exchange has firmly denied these rumors, and has only admitted to “complications…in the domain of fiat transactions.” The exact nature of these complications is a mystery.
Suggested Reading : Learn how Bitfinex compares to Coinbase here.
Tether is a stablecoin that is meant to serve as a bridge currency between fiat and crypto. The price of Tether is supposed to stay in line with the US Dollar, but the token’s market value crashed during the incident, falling below ninety cents on Bitfinex earlier today.
Tether is not an official product of Bitfinex, but the two have a close relationship and share the same operators. Additionally, the exchange trades over $200 million worth of Tether each day. As such, Bitfinex’s actions are widely being cited as the reason for Tether’s sudden price drop.
Tether has since regained its value, but months of bad publicity have put the stablecoin’s future in question. The crypto community has questioned Tether’s prolific token minting practices, leading many to doubt if Tether actually holds as much USD in its reserves as it claims. The coin has also been accused of being instrumental in price manipulation and wash trading.
Since stablecoins exist only to maintain their value, price fluctuations are not so forgivable. As Tether falters, emerging competitors such as Circle’s USDCoin are hoping to take Tether’s place as top stablecoin. Time will tell whether Tether can endure its seemingly endless bad publicity.
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