Bitfinex - FRAUD, price manipulation, fake transactions

[squatter]

Bitfinex operates worldwide. According to your words, if they are registered in BVI that means they can trade in USA as well...because they are not based in USA.

"Trading in" means having a business presence in not having customers in. Under your logic, every online business would have to apply for licences in every jurisdiction in the world.

The US government interprets jurisdiction based on operational presence (corporate registrations, headquarters), jurisdiction of customers, or both. If you read the BTC-e indictment, the DOJ established that BTC-e offering services to Americans partially formed the basis for charging them:

From page 2 of the indictment:

Despite doing substantial business in the United States, BTC-e was not registered as a money services business with the United States Department of the Treasury's Financial Crimes Enforcement Network ("FinCEN"), as federal law requires. As described below, BTC-e had no meaningful anti-money laundering processes in place and lacked an effective anti-money laundering program, as federal law also requires.

Online businesses are supposed to apply for licenses where they operate (read: where their customers reside) if their business requires licensing. In many cases, licenses are not required. However, money services businesses (or equivalent) are required to be registered and licensed in many jurisdictions, such as the US.

Whether or not an exchange should obtain a license is a matter of risk analysis. The likelihood of enforcement actions is usually the main factor in deciding whether to get the proper licenses.

[mayax]

Bitfinex operates worldwide. According to your words, if they are registered in BVI that means they can trade in USA as well...because they are not based in USA.

"Trading in" means having a business presence in not having customers in. Under your logic, every online business would have to apply for licences in every jurisdiction in the world.

The US government interprets jurisdiction based on operational presence (corporate registrations, headquarters), jurisdiction of customers, or both. If you read the BTC-e indictment, the DOJ established that BTC-e offering services to Americans partially formed the basis for charging them:

From page 2 of the indictment:

Despite doing substantial business in the United States, BTC-e was not registered as a money services business with the United States Department of the Treasury's Financial Crimes Enforcement Network ("FinCEN"), as federal law requires. As described below, BTC-e had no meaningful anti-money laundering processes in place and lacked an effective anti-money laundering program, as federal law also requires.

Online businesses are supposed to apply for licenses where they operate (read: where their customers reside) if their business requires licensing. In many cases, licenses are not required. However, money services businesses (or equivalent) are required to be registered and licensed in many jurisdictions, such as the US.

Whether or not an exchange should obtain a license is a matter of risk analysis. The likelihood of enforcement actions is usually the main factor in deciding whether to get the proper licenses.

"The likelihood of enforcement actions is usually the main factor in deciding whether to get the proper licenses.  "

"Online businesses are supposed to apply for licenses where they operate (read: where their customers reside) if their business requires licensing"

GREAT POINT !

Conclusion: all the countries request license for a business like Bitfinex because it's a financial business; all the countries(even BVI, Belize, Bermuda, etc) have laws regarding to the trading and operating as money transmitter. Indeed, not many countries enforce their laws but it doesn't mean that that business is legal.

Bitfinex like many(most) other exchangers are illegal. I am not even mention the other shits that Bitfinex is doing, just the absence of their license. So, Bitfinex is a criminal (lawbreaker, felonious) company..

It's not hard to understand...

[TheQuin]

"The likelihood of enforcement actions is usually the main factor in deciding whether to get the proper licenses.  "

"Online businesses are supposed to apply for licenses where they operate (read: where their customers reside) if their business requires licensing"

As I pointed out in my last post this is specific to US law and their interpretation of whether they can enforce their laws on other countries. I also said that Bitfinex has responded to this action by the US by barring all US based customers. This is the same as has happened in the online gaming industry and so far has been successful in allowing them to continue their lawful businesses wherever they are based.

You gave Japan as an example of where Bitfinex is breaking the law. Where does Japanese law state that?

Conclusion: all the countries request license for a business like Bitfinex because it's a financial business; all the countries(even BVI, Belize, Bermuda, etc) have laws regarding to the trading and operating as money transmitter. Indeed, not many countries enforce their laws but it doesn't mean that that business is legal.

You neglect the fact that most of these countries do not specify Cryptocurrencies specifically in their laws and currently do not requires these businesses to meet any more licencing requirements than they already do.

Bitfinex like many(most) other exchangers are illegal. I am not even mention the other shits that Bitfinex is doing, just the absence of their license. So, Bitfinex is a criminal (lawbreaker, felonious) company..

Still not true.

It's not hard to understand...

It is for you.

[Samarkand]

...
I don't believe that Hong Kong is relevant anymore. There used to be some parent company registrations there and supposedly some operations are still run from HK. But if you read Bitfinex's terms, all services are governed by British Virgin Islands law. BVI regulators haven't done anything for the same reason Bitfinex sought jurisdiction there. BVI is a rubber stamp regulator, like many independent island nations. They rarely enforce any laws against anyone. For anything.

...

Great analysis of the situation.

However, I think there is at least one other reason why they decided to set up shop in the British Virgin islands
apart from the "rubber stamp regulation". If you are running a questionable business it makes sense to incorporate in
one of these exotic islands, because it is incredibly hard, expensive and tiresome to litigate against an offshore business.

In the hypothetical case that Bitfinex will face lawsuits by investors or traders they are pretty safe, because not many
are going to be willing or even be able to sue them before a court in the British Virgin islands.

Therefore I´d argue that the two big reasons to incorporate in the BVIs are the lax regulation and the protection
from lawsuits that offshore jurisdictions offer.

[mayax]

"The likelihood of enforcement actions is usually the main factor in deciding whether to get the proper licenses.  "

"Online businesses are supposed to apply for licenses where they operate (read: where their customers reside) if their business requires licensing"

As I pointed out in my last post this is specific to US law and their interpretation of whether they can enforce their laws on other countries. I also said that Bitfinex has responded to this action by the US by barring all US based customers. This is the same as has happened in the online gaming industry and so far has been successful in allowing them to continue their lawful businesses wherever they are based.

You gave Japan as an example of where Bitfinex is breaking the law. Where does Japanese law state that?

Conclusion: all the countries request license for a business like Bitfinex because it's a financial business; all the countries(even BVI, Belize, Bermuda, etc) have laws regarding to the trading and operating as money transmitter. Indeed, not many countries enforce their laws but it doesn't mean that that business is legal.

You neglect the fact that most of these countries do not specify Cryptocurrencies specifically in their laws and currently do not requires these businesses to meet any more licencing requirements than they already do.

Bitfinex like many(most) other exchangers are illegal. I am not even mention the other shits that Bitfinex is doing, just the absence of their license. So, Bitfinex is a criminal (lawbreaker, felonious) company..

Still not true.

It's not hard to understand...

It is for you.

Again, I will give you a simple example of a REAL forex company(they trade BTC too) and their licenses:

http://www.avatrade.com/forex/cryptocurrencies/bitcoin    (see the bottom):

AVA Trade EU Ltd is regulated by the Central Bank of Ireland (No.C53877)
AVA Trade Ltd is regulated by the B.V.I Financial Services Commission (remember BVI? Bitfinex is registered in this country. Did you notice any license number from  the B.V.I Financial Services Commission) ?
Ava Capital Markets Australia Pty Ltd is regulated by the ASIC (No.406684)
Ava Capital Markets Pty is regulated by the South African Financial Services Board (FSP No.445984)
Ava Trade Japan K.K. is regulated in Japan by the FSA (No.1662) and the FFAJ (No.1574)

This is how it should look a genuine licensed company.

Do you think that this company is stupid and they just throw the money away on these licenses? I guess not.

I can give more examples.  See https://www.oanda.com    (at the bottom/footer) . See a difference between a shit like Bitfinex and licensed company like Oanda.com ?


Can you show me where can you see one license number on Bitfinex website? You stated above that they have a such thing. Where?

[TheQuin]

Again, I will give you a simple example of a REAL forex company(they trade BTC too) and their licenses:

I used to have an account with them. They have offices in all those countries and trade forex, equities and commodities too, hence requiring licences in those countries, unlike Bitfinex.

[mayax]

Again, I will give you a simple example of a REAL forex company(they trade BTC too) and their licenses:

I used to an account with them. They have offices in all those countries and trade forex, equities and commodities too, hence requiring licences in those countries, unlike Bitfinex.

Japan, Germany and many other countries requires a license for trading digital currencies like BTC.

I can show you where BaFin (German Federal Financial Supervisory Authority) requires a licence for trading Bitcoin.

Does Bitfex own a Japan or EU financial license? I don't see it

From all you are saying is that Bitfinex don't need any financial license anywhere.  Right?

[TheQuin]

Japan, Germany and many other countries requires a license for trading digital currencies like BTC.

Sometimes you can actually get something half right, but unfortunately, the other half defeats you.

Another pertinent question you didn't answer.

You gave Japan as an example of where Bitfinex is breaking the law. Where does Japanese law state that?

Does Bitfex own a Japan or EU financial license? I don't see it

It doesn't need one.

Unlike the US they don't consider licenses to be required of companies operating in foreign countries just because some of their citizens may use the service.

From all you are saying is that Bitfinex don't need any financial license anywhere.  Right?

At the moment it would be only the US and even that is dubious due to the fact that the regulators reinterpreted the existing laws after the fact. That being said the US justice system is a conviction machine and they will always win in their own courts so it is possible that a few crypto exchanges may get a fine. With the BTC-e example, it is the money laundering that is the serious issue.

[mayax]

Japan, Germany and many other countries requires a license for trading digital currencies like BTC.

Sometimes you can actually get something half right, but unfortunately, the other half defeats you.

Another pertinent question you didn't answer.

You gave Japan as an example of where Bitfinex is breaking the law. Where does Japanese law state that?

Does Bitfex own a Japan or EU financial license? I don't see it

It doesn't need one.

Unlike the US they don't consider licenses to be required of companies operating in foreign countries just because some of their citizens may use the service.

From all you are saying is that Bitfinex don't need any financial license anywhere.  Right?

At the moment it would be only the US and even that is dubious due to the fact that the regulators reinterpreted the existing laws after the fact. That being said the US justice system is a conviction machine and they will always win in their own courts so it is possible that a few crypto exchanges may get a fine. With the BTC-e example, it is the money laundering that is the serious issue.

according to your thinking, all these regulated companies are idiots because they have financial licenses in many countries.

example: AVA Trade is registered in Ireland so they wouldn't need a financial license in Japan, BVI or South Africa because these countries  don't consider licenses to be required of companies operating in foreign countries , right?

another example is Bitstamp. They were stupids too by taking a EU license, correct?

You can earn good money as "adviser". I am wondering how these companies didn't think about that too...    


BTC-e  was closed for  operating an unlicensed money service business, money laundering, and related crimes.

[TheQuin]

according to your thinking,

Not just my thinking but the regulations and laws applicable in those countries.

all these regulated companies are idiots because they have financial licenses in many countries.

No, they are following the legal requirements of each jurisdiction.

example: AVA Trade is registered in Ireland so they wouldn't need a financial license in Japan, BVI or South Africa because these countries  don't consider licenses to be required of companies operating in foreign countries , right?

AvaTrade has offices including:

Minatoku Akasaka
2-18-1
Tokyo

70 Grayston Drive, second floor
Sandton 2196
Johannesburg

They also use a holding company in BVI that owns some of the subsidiaries. These are operating as Forex, equities and commodities brokers in the said jurisdictions and therefore require an appropriate licence.

another example is Bitstamp. They were stupids too by taking a EU license, correct?

Bitstamp is based in Luxembourg
Bitstamp Europe S.A.
10 rue Antoine Jans
L-1820 Luxembourg
Luxembourg

So obviously is subject to EU regulation.

You can earn good money as "adviser". I am wondering how these companies didn't think about that too...    

You can earn even better money as a Corporate Attorney and these companies certainly use them.

BTC-e  was closed for  operating an unlicensed money service business, money laundering, and related crimes.

As I stated in the last post, money laundering was the serious offence and licence issues an incidental charge that on its own would have probably only resulted in a fine.

Let me ask you another couple of questions about AvaTrade.
Why do they only hold licences in the countries they have a physical presence?
Do you think they do not accept customers from all the other countries in the world?

[Samarkand]

...

Bitstamp is based in Luxembourg
Bitstamp Europe S.A.
10 rue Antoine Jans
L-1820 Luxembourg
Luxembourg

So obviously is subject to EU regulation.

...

According to the mainpage of Bitstamp (bitstamp.net) they are not based in Luxembourg.

If you scroll to the bottom you can see that they are operating out of London:
Bitstamp Ltd
5 New Street Square
London EC4A 3TW
United Kingdom

They do have an office in Luxembourg though (at the address that you provided) and another one in New York (I guess
they plan to enter the US market in the future). The main operations are based in London.

They should be able to continue to service the European market due to their license in Luxembourg even
if Britain actually leaves the European Union in the next years.

[TheQuin]

@Samarkand

I'm pretty sure I remember them being based in Luxembourg when the first started but it doesn't really change any of what I was saying. If they didn't have a Luxembourg office they wouldn't require a licence in the EU after Britain becomes free again.
 

[Samarkand]

@Samarkand

I'm pretty sure I remember them being based in Luxembourg when the first started but it doesn't really change any of what I was saying. If they didn't have a Luxembourg office they wouldn't require a licence in the EU after Britain becomes free again.
 

I remember them being based in Slovenia originally. If I´m not mistaken the two original founders (Nejc Kodric is one of them, I don´t remember the other
Co-Founder) are Slovenian nationals, too.

But this is not really the topic of this thread.

What are your thoughts on the future of Bitfinex? I remember that you claimed regularly that Bitfinex was used by institutional customers due
to it having the biggest exchange volume. Now that CBOE and CME are launching their Bitcoin futures in the next 1-2 weeks and NASDAQ is
going to offer it in 2018 as well, these institutional investors will surely leave Bitfinex towards more legitimate brokers? After all they will
be able to trade the CME contracts at reputable brokers like Interactive Brokers and so on, which offer deposit guarantees and are registered
in less questionable jurisdictions than Bitfinex.

Clearly Bitfinex will suffer hugely from this? I can´t really envision a scenario where institutional investors will prefer Bitfinex over one
of the legit fiat brokers.

[Quickseller]

@Samarkand

I'm pretty sure I remember them being based in Luxembourg when the first started but it doesn't really change any of what I was saying. If they didn't have a Luxembourg office they wouldn't require a licence in the EU after Britain becomes free again.
 

I remember them being based in Slovenia originally. If I´m not mistaken the two original founders (Nejc Kodric is one of them, I don´t remember the other
Co-Founder) are Slovenian nationals, too.

But this is not really the topic of this thread.

What are your thoughts on the future of Bitfinex? I remember that you claimed regularly that Bitfinex was used by institutional customers due
to it having the biggest exchange volume. Now that CBOE and CME are launching their Bitcoin futures in the next 1-2 weeks and NASDAQ is
going to offer it in 2018 as well, these institutional investors will surely leave Bitfinex towards more legitimate brokers? After all they will
be able to trade the CME contracts at reputable brokers like Interactive Brokers and so on, which offer deposit guarantees and are registered
in less questionable jurisdictions than Bitfinex.

Clearly Bitfinex will suffer hugely from this? I can´t really envision a scenario where institutional investors will prefer Bitfinex over one
of the legit fiat brokers.

The CBOE et el., are not going to offer 24 hour trading, which puts anyone with an open position while the markets are closed at risk of the market moving against them, potentially to the extent they have negative equity in their accounts while the markets are closed. The circuit breakers will also make the futures market unattractive because traders may not be able to take advantage of some of the large swings in price, and may be unable to exit positions if the market goes a certain way.

I would expect liquidity and trading volumes to increase on bitfinex while the futures market is open while traders take advantage of discrepancies in price.  The leverage trading that bitfinex offers is arguably better than what is being offered on the futures exchanges because of 24 hour trading.

[Samarkand]

...

The CBOE et el., are not going to offer 24 hour trading, which puts anyone with an open position while the markets are closed at risk of the market moving against them, potentially to the extent they have negative equity in their accounts while the markets are closed. The circuit breakers will also make the futures market unattractive because traders may not be able to take advantage of some of the large swings in price, and may be unable to exit positions if the market goes a certain way.

...

Interesting viewpoint.

However, I´d argue that the circuit breakers will prove to be less relevant than you currently think.
As more (institutional) money flows into Bitcoin the market cap will obviously grow even further, which should result in less
volatility. When BTC was having a market cap in the single-digit billions the swings were more extreme, because
whales could easily move the price.

These days the ecosystem is much more mature and the high market cap makes it more difficult to cause big
price swings. E.g. years ago a 10M $ (worth of BTC) market sell would have easily caused a decline of 20-30 % and nowadays this
would cause a less pronounced market move.

Therefore I think that the circuit breakers at 20 % won´t really be triggered unless a really extreme event happens.

[mayax]

mysterious institutions are buying hundreds of millions of Tethers from an unlicensed company, without an official bank account from April till December,  hacked three times now and never provided a single answer about the so called "authorities investigation", and then a FOMO (fear of missing out man) buying Bitcoins on their exchange.

 totally plausible.  



it's funny how TheQuin, has firstly mentioned that Bitfinex is licensed in HK through  RENRENBEE LIMITED ( HK) and now, he doesn't mention anymore about the non-existent Bitfinex license in HK . More that that, he is stating that Bitfinex doesn't need one at all.     LOL

TheQuin, try to keep the line.

[TheQuin]

it's funny how TheQuin, has firstly mentioned that Bitfinex is licensed in HK through  RENRENBEE LIMITED ( HK) and now, he doesn't mention anymore about the non-existent Bitfinex license in HK . More that that, he is stating that Bitfinex doesn't need one at all.      LOL

As I said back here https://bitcointalk.org/index.php?topic=2074565.msg25734460#msg25734460 whether or not that information is out of date doesn’t actually change anything.

It is a lot funnier how you ignore the pertinent questions again.

Let me ask you another couple of questions about AvaTrade.
Why do they only hold licences in the countries they have a physical presence?
Do you think they do not accept customers from all the other countries in the world?

That could be because the answers to those question prove that your arguments are completely wrong.

mysterious institutions are buying hundreds of millions of Tethers from an unlicensed company, without an official bank account from April till December,  hacked three times now and never provided a single answer about the so called "authorities investigation", and then a FOMO (fear of missing out man) buying Bitcoins on their exchange.

 totally plausible.   

More unsubstantiated lies and FUD.

What are your thoughts on the future of Bitfinex? I remember that you claimed regularly that Bitfinex was used by institutional customers due to it having the biggest exchange volume. Now that CBOE and CME are launching their Bitcoin futures in the next 1-2 weeks and NASDAQ is going to offer it in 2018 as well, these institutional investors will surely leave Bitfinex towards more legitimate brokers? After all they will be able to trade the CME contracts at reputable brokers like Interactive Brokers and so on, which offer deposit guarantees and are registered
in less questionable jurisdictions than Bitfinex.

Clearly Bitfinex will suffer hugely from this? I can´t really envision a scenario where institutional investors will prefer Bitfinex over one of the legit fiat brokers.

Leaving aside the pejorative language used to discredit Bitfinex it is an interesting question. Before I get on to that Interactive Brokers are a retail outfit and no institutions would use them.
I’m really not sure what the impact will be overall, so this is more idle speculation than a prediction. I think it brings a whole lot of new money to the game that could actually increase the overall volume to an extent that both crypto exchanges and the futures markets could see an increase in trade. Many of those trading the futures will be doing so to hedge positions in actual Bitcoins. Quickseller made valid points about market hours and circuit breakers both of which increase the need to be able to hedge and crypto exchanges are the only place to effectively do it.

[Remember remember the 5th of November]

For some reason the withdrawals are taking 24hrs+, for some people even longer than 2 days, for small amounts, let alone big ones.

[mayax]

Bitfinex and CEX are sharing the same bank account. Their bank is  :    Bank Spółdzielczy w Skierniewicach  (Cooperative Bank in Skierniewice).

why do they share an account name?    

As you know, Bitfinex didn't have any official bank account until November 2017 because their accounts were closed in April 2017.

Why does Bitfinex (a "legal " company) is sharing a bank account with other exchanger, it's a "mystery"  

[Quickseller]

Bitfinex and CEX are sharing the same bank account with Bank Spółdzielczy w Skierniewicach  (Cooperative Bank in Skierniewice).

why do they share an account name?    

Because they use the same bank...