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Author Topic: What the hell is up with BitFinex?  (Read 538 times)
ElHedonista
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April 13, 2013, 05:28:34 AM
 #1

Two days ago, as the bubble popped, I knew this baby had to be shorted now so I could buy BTCs on the cheap.

I found bitfinex, and started trading. All went well, and I went to bed with an order to buy at 70 and close my position.

The price dropped to 65 by 0215 GMT and my deal was never closed. Instead it rebounded to almost 130 and I had to close my position with a serious loss.

Yesterday, I tried to get on the bandwagon. Shorted again. All's well. Made some money. The price dropped to below 70 and I placed several orders to close my position, routing through MTGOX then BFX and nothing happened. Then the price skyrocketed again.

I have screenshots.

I haven't been able to place a single order unless it's routed through BFX since yesterday.

It has been hugely aggrivating that the orders just don't seem to work when BFX let's you think you can trade via MTGOX. Is this a scam? I can make money fine but as soon as I am about to make a real score the system just doesn't let you, one way or another.

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BurtW
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April 13, 2013, 05:35:31 AM
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You should PM unclescrooge https://bitcointalk.org/index.php?action=profile;u=4295 directly.

I have always found him to be very helpful and honest.

There have been a LOT of problems at Mt. Gox lately.

I know one of their highest priorities is to get connected to one or more additional exchanges as soon as they can.  This would help a lot.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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April 13, 2013, 06:03:38 AM
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You should try their loan engine. You loan $$$ to people with a "minimum term" the loanee defines, and then these loans often just disappear from your "active loan" list. You don't lose the interest already gained, but the "minimum term" doesn't hold up at all. Seems to be that in reality as soon as the loanee can get a better deal elsewhere, the loan is canceled.

But as the loaner, you aren't allowed to cancel loans, and are given the impression the loanee can't either.

If loanees can pull out / disappear any time during the term of the loan, bitfinex shouldn't display "Minimum lending time (days)" on the loan page.
ElHedonista
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April 13, 2013, 06:40:10 AM
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You should try their loan engine. You loan $$$ to people with a "minimum term" the loanee defines, and then these loans often just disappear from your "active loan" list. You don't lose the interest already gained, but the "minimum term" doesn't hold up at all. Seems to be that in reality as soon as the loanee can get a better deal elsewhere, the loan is canceled.

But as the loaner, you aren't allowed to cancel loans, and are given the impression the loanee can't either.

If loanees can pull out / disappear any time during the term of the loan, bitfinex shouldn't display "Minimum lending time (days)" on the loan page.

It is extremely fishy.

Either 1) it's a sloppy set-up, in which case fair enough - but we should all be more adequately warned.

2) He's scamming the hell out of us. I've lost nearly 2K because I expected to make a deal on the margins and when I needed to close, I couldn't.
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April 13, 2013, 02:08:51 PM
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I don't think you understand the loan system.

1) You offer a USD loan and it is accepted by a trader.
2) The trader then buys BTC with the loan, that is the only thing they can do with the loan, they cannot take the money out of Bitfinex.
3) The BTC bought with the borrowed dollars cannot leave Bitfinex.  It is kept safe.
4) Now either the price of BTC goes up or it goes down.  This trader is hoping it goes up.
5) In this first example the prices does go up.
     a) When the trader feels like the position has made him enough money he closes the position at a profit.
     b) The trader can do this at any time they want to.  The term of your loan to him is not set in stone, you have agreed to a maximum term for the loan.
     c) The trader sells the BTC.
     d) You get back your principal and interest calculated to the nearest hour I believe.
     e) After paying back the principal and interest to you, whatever remains goes into the trader's account and is their profit.
6) In this second example the price goes down - a lot.
     a) Again this can happen at any time, the loan term is a maximum.
     b) The position is forced to be liquidated and all the BTC are sold.
     c) You get back your principal plus your interest.
     d) In this case there will be nothing left for the trader, they will lose all of the money they put into the trade.
7) One final scenario - which is rare
     a) The loan term expires
     b) The BTC are sold at the current price
     c) You get back your principal and interest, the trader gets the profit
     d) Notice this is the only time you make interest on the full term of the loan

I see your confusion now:

When offering a loan you set a maximum term that you are willing to lend your money.  The borrower sets a minimum term that they are interested in.  The loans are then matched.  Assume you are willing to lend out for a maximum of 7 days and the lender is only willing to borrow if the term is a minimum of 14 days.  Then there is no match.  However, if you are willing to loan for up to 14 days - a 14 day maximum, and the borrower is willing to borrow if there is a loan with a minimum of 7 days available then you have a match.

Do you see now?  You are willing to lend for up to 14 days and the borrower wants to borrow as long as they may keep the money for up to 7 days.  Now the borrower may only end up using the money for 1 hour.  That is not what the minimum refers to.
    
    

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TimJBenham
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April 28, 2013, 04:01:54 AM
 #6

I don't think you understand the loan system.
...
6) In this second example the price goes down - a lot.
     a) Again this can happen at any time, the loan term is a maximum.
     b) The position is forced to be liquidated and all the BTC are sold.
     c) You get back your principal plus your interest.
     d) In this case there will be nothing left for the trader, they will lose all of the money they put into the trade.

Thanks for that explanation. One question I have is who it bearing trader default risk? The lender or Bitfinex?  Don't say that can't happen because of auto-liquidation because there is no guarantee that whatever price reference they are using (MtGox still?) won't gap down or go offline completely.

You are a warlord in the outskirts of the known world struggling to establish a kingdom in the wild lands.
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