The Bitfinex cryptocurrency exchange, everyone’s favourite huge systemic risk in the crypto trading market, keeps losing its banking — ever since they lost their US dollar banking in April 2017, they’ve had to hop from account to account, around the world. As Phil Potter put it around that time:
We’ve had banking hiccups in the past, we’ve just always been able to route around it or deal with it, open up new accounts, or what have you … shift to a new corporate entity, lots of cat and mouse tricks.
Fortunately, they have an ingenious solution to this quandary!
Just, don’t tell anyone, okay. Or else.
Bitfinex’s banks of the day
Larry Cermak at The Block is having great fun reporting on each new Bitfinex banking partner as it pops up. He tweeted about their account at HSBC — and this account inexplicably vanished soon after, and cash deposits to Bitfinex were suspended.
It was around this time that the market finally lost faith in Bitfinex’s dollar-substitute token, Tether — but that’s another post.
The exchange’s latest account is at the Bank of Communication in Hong Kong, under the account name PROSPERITY REVENUE MERCHANDISING LIMITED — a shell company created 15 June 2018, just five days before the Freeh not-an-audit was released.
(Prosperity Revenue Merchandising is also known as Rongli Procurement Co., which only sounds like “wrongly procured.”)
These payments then go through Citibank as correspondent bank, to Deltec in the Bahamas.
Bitfinex bank wires via Citibank should keep moving for approximately two seconds after Citibank finds out — considering Citi got busted in December last year for insufficient attention to the Bank Secrecy Act and anti-money laundering laws. This was a violation of a 2012 consent order.
There are two organisations called “Deltec” in the Bahamas:
- Deltec Bank & Trust Limited — which is licensed to operate in the Bahamas;
- Deltec Financial & Trust Services — which isn’t, and ran an upfront-fee lottery scam in 2007.
It’s not clear which one Bitfinex is attempting to use. (Though probably the real one. It’s not clear if they know who their customer is.)
Be your own bank! Or, you can be our bank
- “A user wishing to initiate a fiat deposit on Bitfinex will create a deposit request to signal interest in completing a deposit. Through this deposit request, a user will be able to specify the exact amount and currency which they wish to deposit.
- Following an account review (which may take up to 48 hours), the user will receive a deposit notification which will include, among other things, bank details specific to the individual’s transaction.
- The user will be able to initiate the deposit based on the information received through the deposit notification. The deposit will subsequently be processed within 6-10 business days from Bitfinex.”
That is — you get told an arbitrary bank to send your “deposited” money to.
It’s not clear, but this looks very like Bitfinex are attempting to matching up deposit and withdrawal requests — so that they take a fee, but the bulk of the deposit doesn’t touch their accounts.
You might think, “what a clever system! Has anyone tried this before?” And the answer is, yes — sports betting and poker sites did this to obscure the graph of deposits and withdrawals, when the US government was putting pressure on them.
This is also how Liberty Reserve worked — brokering flows between users’ accounts. Arthur Budovsky, the founder of Liberty Reserve, is currently doing twenty years’ jail for money laundering.
Nice deposit info ya got there, shame if something happened to it
Here’s the totally fine, and not at all disturbing, message you get when you put in a deposit request:
This banking information is being provided to you for purposes of contributing good faith funding to your account on Bitfinex. At all times, you are subject to our Terms of Service.
This banking information is commercially sensitive and confidential. You should be very careful with this information. You are asked to keep this information to yourself and to not share it except with your financial institution.
Divulging this information could damage not just yourself and Bitfinex, but the entire digital token ecosystem. Accordingly, you are cautioned that there may be serious negative effects associated with this information becoming public.
Pursuant to the Terms of Service, Bitfinex is not liable for or responsible for the actions of third parties.
[ ] I agree not to make this information public and that I have read and understood the above.
That third paragraph — damage yourself? — and especially that fourth one … are those threats against snitches?
We shall prevail!
Bitfinex aren’t quite sure who’s causing all their problems — but they’re going to fight back. From their original announcement:
We believe this system to be significantly more durable in the face of sustained attacks by our competition and their supporters. Ongoing campaigns against us will only result in our company becoming stronger and better.
Your worst enemy, Bitfinex … it’s you.
I’m increasingly of the mind that Tether/Bitfinex is Ozark: Crypto. https://t.co/fFrOxuYkhZ
— Charles Arthur (@charlesarthur) October 16, 2018
just imagine: right now there is a bitcoiner desperately getting 10k together so they can open an account on bitfinex
— Boxturret …!
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