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Bitcoin and Tether react to the bankruptcy rumors

USDT and Bitfinix failures may be fatal for the whole cryptos

15.Oct.18 9:16 AM
By Abigail Richards


Bitcoin and Tether react to the bankruptcy rumors
In its six-year history, the Hong Kong cryptocurrency stock exchange Bitfinex is no stranger to any controversy. At the moment it is rumored that the next scandal is already lurking; one where many investors wonder what the next step will be for the company

In a recent Bloomberg report, it became known that the Puerto Rico-based Noble Bank ran into financial problems around the beginning of October. The bank was forced to let customers go, including Bitfinex and Tether (USDT).

Although this report itself would not be a big news for many a crypto company, it is remarkable in Bitfinex 'case. The company has already exchanged bank frequently in the past. Many bank partners often did not want to associate with Bitfinex.

Deposits in euros, yen, and pounds were also discontinued immediately after the news came out. Bitfinex was hastily looking for a new bank partner. Larry Cermak of The Block found out on Saturday that the company was able to set up an account with HSBC under a so-called 'shell account'. However, this relationship was short-lived as Bitfinex had to cancel all credit deposits on the account on Thursday.

The news about the loss of Noble as a banking partner quickly led to a rumor on Twitter about a possible bankruptcy. As a result, many users exchanged their Bitfinex fiat credit for cryptocurrencies.

In the meantime, bankruptcy rumors and the cessation of further fiat deposits have led to a growing price premium on Bitfinex. According to BitMEX research, Bitcoin (BTC) is trading on Bitfinex at a premium of 1.75% compared to other exchanges.

Bitfinex announces that it expects to have resolved the case within a week. However, bankruptcy can have major consequences for the crypto world; not so much because of the loss of Bitfinex itself but because of the consequences of the collapse of Tether. For now, however, it remains to be seen whether Bitfinex can restore the case.

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