One week after losing more than $60m in a high-profile hack, Bitfinex is once again one of the largest bitcoin exchanges by US dollar volume.
The Hong Kong-based bitcoin exchange led its competitors in USD/BTC trading over the last week, grabbing more than 20% of the market. In total, it transacted 58,700 BTC (roughly $36m) during the seven days ending 20:45 UTC on 17th August, Bitcoinity data reveals.
While this figure puts Bitfinex ahead of all other exchanges in terms of USD/BTC trading volume, analysts were split on whether to view the development as a sign the company had recovered.
Market observers told CoinDesk the activity could either be interpreted as evidence of the exchange’s resilience, or as a signal that accountholders were seeking to recoup funds while it was still operational.
Cryptocurrency investment firm founder Jacob Eliosoff, for example, told CoinDesk:
“A lot of the activity is likely related to people withdrawing their holdings out of fear. Withdrawal-driven volume isn’t actually reassuring.”
However, Eliosoff was not alone in voicing his concerns about this activity. To some, the robust trading activity in the wake of the still unsolved attack is a cause for concern.
Petar Zivkovski, director of operations for leveraged trading platform Whaleclub, asserted that the volume was likely driven by the uncertainties facing accountholders.
“Much of the volume in the days following the hack consisted of traders selling their USD to BTC to be able to withdraw relatively quickly,” he said.
Solvency concerns
Bitfinex’s perception perhaps took the biggest hit from avid bitcoin traders.
At press time, informal investigations into Bitfinex’s solvency were still ongoing on social media, as were calls for the exchange to be more transparent about its financial issues in the wake of the attack. Bitfinex did not respond to requests for comment today.
BTC VIX, an admin at bitcoin trading club Whale Club, provided similar input on volumes, stating that concerns like these caused to Bitfinex experience an inevitable “mass exodus” as accountholders took funds that had been locked up for almost a week.
After withdrawing their funds, Bitfinex’s accountholders went into “wait and see mode”, he said.
While some Bitfinex accountholders may be waiting on the sidelines to see whether the exchange’s platform works, other analysts have raised the question of whether the exchange will even remain solvent.
Tim Enneking, chairman of digital currency fund EAM, told CoinDesk:
“I’m not convinced the exchange will survive.”
Debt tokens
One major implication of whether the exchange remains open long-term is the value of the Bitfinex token, a blockchain-based asset representing debt in the exchange that was given to customers.
Issued on 7th August at $1 per BFX token, the value of the digital assets has since fluctuated wildly, rising from a low of $0.26 at 09:00 UTC on 12th August to a high of $0.44 at 06:00 UTC on 15th August, figures provided by leveraged trading platform BitMEX reveal.
Arthur Hayes, CEO of BitMEX, emphasized that he believes the value of the token, and the figures on the index his firm has created to track their value, are likely to continue fluctuating due to lingering questions about their worth.
“Bitfinex has published no public data about their financial health, so traders are either wildly bearish or bullish on Bitfinex’s future prospects,” he said.
Eliosoff also spoke to the uncertain nature of the token. No details as to the total number of tokens issued have yet been provided by the exchange.
“Does it represent a genuine claim on future Bitfinex earnings?” he wondered. “What’s their plan to pay back holders? Will courts and regulators let the BFX plan proceed, or will they step in with some other process like bankruptcy?”
He is certainly not the only one to voice concerns about Bitfinex’s decision to issue these tokens. In recent weeks, legal experts have continued to speak openly about the uncertainty over their legal status and concern about the exchange’s liability for its actions.
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