Home News Exchange ING Becomes Banker to Bitfinex After the Snub from Wells Fargo

ING Becomes Banker to Bitfinex After the Snub from Wells Fargo

February 21, 2018 22:52
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After being snubbed by Wells Fargo, cryptocurrency exchange Bitfinex has found a friend in ING Bank. The Dutch bank has opened an account for Bitfinex, which was confirmed by its spokesperson Harold Reusken. However, Reusken didn’t divulge any other details, citing customer confidentiality as a reason. All he had to say was that ING conducts more extensive due diligence than other banks when it comes to cryptocurrency transactions.

Bitfinex has not been identifying the banks that transact with it since last year. However, this connection with ING is important because the Dutch bank is a multinational brand well known for its best practices. Therefore, ING’s willingness to work with one of the world’s largest cryptocurrency exchanges in the world has itself become a hot topic in the industry. Cryptocurrency exchanges generally provide little information about their transactions to provide the much needed anonymity to their customers. But ING, on the other hand, will want to have more information about these transactions. It will be interesting to see how this seemingly contradictory relationship plays out.

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In the past, the relationship of Bitfinex with Wells Fargo hasn’t played out well. The bank had suspended its role as correspondent banker to the exchange last year. As a quick fix Bitfinex had directed its customers to Bank Spoldzielczy, according to leaked documents. Bank Spoldzielczy, however, hasn’t confirmed whether Bitfinex was its customer or not.

Bitfinex and CFTC at loggerheads because of Tether

One of the largest Bitcoin exchanges in the world, Bitfinex has been under fire from US Commodity Futures Trading Commission (CFTC) for not providing adequate information about its Tether cryptocurrency. Due to lack of details provided by the company CFTC had issued subpoenas to Bitfinex and Tether both on December 6 last year. Still, the companies haven’t submitted to an external audit, and have also not provided any evidence to prove that they’re backing their cryptocurrency with US dollar reserves. All they’ve provided is a verbal assurance that they’re complying with the reserve requirements.

Tether growing in size, and therefore in controversy

Despite all this hoopla, Tether is continuously growing in size and in popularity. It’s 2nd largest traded cryptocurrency in the world after Bitcoin, and it recently surpassed $2.3 billion in market cap, which has alarmed the regulators. There’re serious concerns that the creators of cryptocurrency (who’re Bitfinex management team) are not backing their currency with US dollar reserves as they claim. The issue has become so tense that it has reached Dutch parliament – Henk Nijboer, a member of opposition party recently questioned the Finance Minister in Parliament over ING’s involvement with Bitfinex.

There’re also rumors that Bitfinex is using its Tether cryptocurrency to artificially inflate the price of Bitcoin by issuing more and more Tether tokens not backed by US dollar reserves. The newly issued tokens, critics allege, are then being used to spur rallies or falls in the prices of Bitcoin for company’s own profit at the cost of others’ loss.

None of these allegations have been proven till now. However, the balance sheet audit of Bitfinex has also not materialized till now.

Technology and business were my core interests, so it wasn't surprising that I got interested in cryptocurrencies, which operate at the intersection of both these things. Now I live my passion by trading cryptocurrencies and covering Cryptocurrency news. You can connect with me on Facebook to learn more about me. :)

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