Bitfinex blocks withdraws

[figmentofmyass]

Bitfinex allows trading of unverified users, and then when they have funds in their accounts and they "suddenly" find that they are from the US, they take the money and lock the account.

is that a fact? i haven't heard about any of these cases with bitfinex. i know with bitmex, USA traders have had their positions liquidated and accounts closed but i think they are allowed to withdraw their funds. i've never been able to get a straight answer about what bitfinex does in these situations.

[adaseb]

As far as I know Bitfinex doesn't do KYC. There were some rare cases that they had to perform it or for some very high balanced accounts.

Can you provide more info like how much did you deposit, could be a ballpark figure?

Also where did the deposits originate from, if you used some Mixer of some sort it might of set off some red flag and that's why you got KYC.

Glad it worked out in the end, and that you got all your money back.

[gentlemand]

As far as I know Bitfinex doesn't do KYC. There were some rare cases that they had to perform it or for some very high balanced accounts.

They most certainly do if you're depositing or withdrawing fiat - https://support.bitfinex.com/hc/en-us/articles/115003355893-Account-Verification-Individuals

They say they don't do it if you don't touch fiat but there've been cases where they have imposed it on people who were crypto only.

[timerland]

Bitfinex allows trading of unverified users, and then when they have funds in their accounts and they "suddenly" find that they are from the US, they take the money and lock the account.

is that a fact? i haven't heard about any of these cases with bitfinex. i know with bitmex, USA traders have had their positions liquidated and accounts closed but i think they are allowed to withdraw their funds. i've never been able to get a straight answer about what bitfinex does in these situations.

I should have structured this a bit clearer, but there is truth in what I said. If you want to use fiat currencies, you will 100 percent need to verify your ID - this is standard for basically most big exchanges. I have seen cases though if you are only trading crypto to crypto and you still get your account closed if you are found to be from the US. It's really dodgy from them, and I wish they could either allow no US customer to touch their exchange, or allow them to move their funds away from the exchange when it's found out to be a US customer.

Exchanges nowadays are pulling too many tricks to get ahold of user funds, it's crazy and it's one of the reasons why I choose to use and support DEX's mostly (although there is an immense lack of them).

Good job OP with getting your money back - glad to see it was worth the hassle.

[piqlet13]

confirmed. having the same issue right now , withdrawals blocked until i declare every single data they want according to their KYC form which is full of question that are out of line.. in addition never requested fiat withdrawals just used the account for coin deposits and withdrawals..

Reasons for transfers from and to your Bitfinex account;
A clear and detailed explanation your account activity and objectives.
A detailed explanation of the sources of all funds deposited to Bitfinex; provide details on how and where you acquired the funds that were deposited to your account. Make sure to include TXids and addresses that describe the source of the funds deposited to your Bitfinex account.
A proof of source of funds confirming how the deposited funds were originally acquired.
A detailed description of the destination you are sending your funds to from your Bitfinex account
Have you ever opened and used any other account(s) on Bitfinex? If so please provide the user name(s) and email address(es) of any account ever opened. explain why you operated more than one account, if you have.

[squatter]

confirmed. having the same issue right now , withdrawals blocked until i declare every single data they want according to their KYC form which is full of question that are out of line.. in addition never requested fiat withdrawals just used the account for coin deposits and withdrawals..

Good to know. Bitfinex has obviously been ramping up their AML/KYC process over the past few months. There have been increasing reports of accounts being frozen and KYC demanded, and they also just added additional KYC requirements for verified users.

Fortunately, these cases generally seem to end with customers getting their money back. Unfortunately, you will probably need to complete their KYC process unless you're willing to forfeit the funds in your account. They apparently flagged your account for risky behavior so there's also the possibility that they will close it.

In general, I would steer clear of Bitfinex if you're trying to avoid KYC. Too many people are getting caught in this net.

[piqlet13]

the documents they are asking has to be notarized according to other posts. how can you have a notarized document between you and your friend, while exchange  allows you to deposit  from 3rd party wallet without notorized document aka KYC decleration lol. this just seems like an ultimate scam.

[dkbit98]

Thank you for updating with latest news.

Bitfinex  asking 'notarized document'...  means that De Facto they don't have no-kyc level anymore.
Now they have crazy strict kyc 

[o_e_l_e_o]

What a joke.

This is some of the most invasive questioning yet. Where did your money come from, how and where did you earn it, what you are doing with it on Bitfinex, where is it going, what are you going to use it for, and "proof" of this things (whatever they define "proof" as). And they want it all notarized? At this point you might as well just send them your bank statements, tax returns, bills, shopping receipts, passport, selfie, and colonoscopy report. I know we covered this in another thread which was unfortunately deleted squatter, but no other financial service requires this kind of detail for individual users (unless you are trading millions).

Not only that, but coming from Bitfinex it is doubly scammy. They want you to provide a "proof of source of funds" for your deposits of a few hundred dollars, but they can't provide "proof of source of funds" for billions of dollars worth of Tether. Hypocritical scammers. Avoid Bitfinex and avoid KYC.

Let's look on the bright side though - more and more exchanges pulling this scammy nonsense will drive the growth and development DEXs.

[squatter]

I know we covered this in another thread which was unfortunately deleted squatter, but no other financial service requires this kind of detail for individual users (unless you are trading millions).

Except for cryptocurrency exchanges. Bitstamp and others are known for this level of customer due diligence. More will follow.

I think it's clear from the scope of the FATF travel rule and 4th/5th AML Directives that VASPs are going to be regulated more strictly than traditional banks. The 5th directive limits anonymous remote or online transactions to €50, which basically destroys the notion of anonymous trading accounts. Not to mention the customer due diligence and suspicious activity reporting requirements, which extend to all custodial platforms and don't seem to have clear minimum thresholds.

Let's look on the bright side though - more and more exchanges pulling this scammy nonsense will drive the growth and development DEXs.

I agree. I still don't think it's nonsense, though. Regulators are breathing down the neck of custodial/centralized services very hard right now. I'd love to be a fly on the wall in the war room of these exchanges to understand what they're dealing with.

My sense is that it's a "rock and a hard place" situation. The only real solution for end users is don't use centralized exchanges, particularly large ones that are being targeted by regulators and law enforcement agencies.

[mr.relax]

I was able to proof anything they asked for, so after a long struggle they let me withdraw and closed my Account.
Actually I could not show that I bought the SAME coins before I sent them to Bitfinex,
but I could proof that I bought 2014 much more coins(at a lower price) at another exchange, paying from my bankaccount.
Half year ago finex did not yet ask for Notar signed documents.
One possible reason for this ransomholding of users coins might also be,
all big exchanges now use blockanalysis for to check the origin.
And almost ALL coins had once been in the darknet, even if it had been 3years and 25 transactions before.
So almost NOBODY is safe , the red alert can be on on virtual everyone.

To me this looks like bitfinex is no more liquid.
Withdraw everything as long as you can...

[o_e_l_e_o]

To me this looks like bitfinex is no more liquid.

It's something I've suspected for a long time (although they would obviously never confirm it). The whole business surrounding Tether, where they slowed moved from "backed up 1-to-1 with USD" through ever more loose definitions before finally arriving at "some of it is backed up with a variety of unspecified assets, including future loan repayments on a loan we made to ourselves, maybe", should alone be enough to make anyone wary of them. The fact that they printed $700 million Tether out of thin air without proving it was backed up by anything, and then "loaned" it to themselves, is outright scammy. Or their ICO launch of a useless token which was only done to cover their losses.

Plenty of exchanges in the past have used unannounced and invasive KYC to force users to choose to either upload their documents or forfeit their coins, and then just kept whatever coins aren't claimed. I wouldn't at all be surprised if Bitfinex does the same, but given how scammy they are, no one should be trusting them with their documents (or their coins, but if people followed that advice then they wouldn't be in this mess in the first place).

[piqlet13]

I was able to proof anything they asked for, so after a long struggle they let me withdraw and closed my Account.
Actually I could not show that I bought the SAME coins before I sent them to Bitfinex,
but I could proof that I bought 2014 much more coins(at a lower price) at another exchange, paying from my bankaccount.
Half year ago finex did not yet ask for Notar signed documents.
One possible reason for this ransomholding of users coins might also be,
all big exchanges now use blockanalysis for to check the origin.
And almost ALL coins had once been in the darknet, even if it had been 3years and 25 transactions before.
So almost NOBODY is safe , the red alert can be on on virtual everyone.

To me this looks like bitfinex is no more liquid.
Withdraw everything as long as you can...

Mr. relax can i pm you buddy, about the steps i should follow maybe you can give some usefull information

[mr.relax]

I wrote here, what I did.
I explained them everything and brought the evidence that I could.
It did not always match, what they wanted to see.
There was plenty of writing back and fourth, and in the end, after 1 month and maybe 30 emails, they let me withdraw.
Actually I could also never say, where I got exact this coins, because I only deposit and Withdraw crypto, and used Finex only for buying/selling into USDT.
But fortunately I could show screenshots from another exchange, where I bought a ton of BTC 2014 with euros.

Anyway I had a quite big volume. But just only during the ransom time, I lost big because BTC was falling.
I neved had to show notar signed statements, but finex even asked me about my income, my bankaccounts and how much euros i have and earn.
About my profession. If I remember well, they also asked for taxdeclarations of my past!
INCREDIBLE!!!
Simply asking that amount of very private informations, would bring any european companys CEO into jail! This is not KYC. This is RANSOM and pure illegal!!!
Its against all data-protection-laws, at least in Europe.

A clear sign that they dont show good will, is that they let you deposit and trade, but they block when you want to withdraw ;-)

In addition to not use Bitfinex anymore, I strongly recommend not to use Tether too!!!
If you only trade in BTC/Altcoins, you should use something like waves https://waves.exchange/
If you want to go to fiat temporarily, use any ETH dex, but waves now also provides a stablecoin: usd-n.

[squatter]

To me this looks like bitfinex is no more liquid.

It's something I've suspected for a long time (although they would obviously never confirm it). The whole business surrounding Tether, where they slowed moved from "backed up 1-to-1 with USD" through ever more loose definitions before finally arriving at "some of it is backed up with a variety of unspecified assets, including future loan repayments on a loan we made to ourselves, maybe", should alone be enough to make anyone wary of them.

The elephant in the room is the $850 million that law enforcement seized from Bitfinex.

I'm not trying to defend Bitfinex/Tether but I really wonder, what would you have expected Bitfinex to do in that situation? Enter bankruptcy proceedings like Mt. Gox? Haircut customer balances to account for the losses?

It seems like they are damned if they do, damned if they don't. What was the best course of action to protect Bitfinex and Tether customer interests?

[o_e_l_e_o]

What would you have expected Bitfinex to do in that situation?

Be honest with their users and the community would be a good start. "The Fed has seized $850 million, we are fighting to get it back, and in the meantime we will set up a structured plan to use our profits to replace the losses" or something similar. Not print $700 million Tether out of thin air, back it up with nothing, and then loan it to themselves. They essentially have haircutted customer balances, as everyone currently holding Tether now holds less value than they did before as Tether is no longer backed up. If everyone tried to cash out their Tether, they wouldn't be able to. Bitfinex have just shrouded it in loans and ICO launches and other shady behavior so half the people using Tether don't even realize it isn't worth what they claim.

[squatter]

What would you have expected Bitfinex to do in that situation?

Be honest with their users and the community would be a good start. "The Fed has seized $850 million, we are fighting to get it back, and in the meantime we will set up a structured plan to use our profits to replace the losses" or something similar.

That's exactly what they did after getting hacked in 2016. Much of their customer base was naturally disgruntled about getting their balances haircut and being issued USD-denominated debt tokens valued lowly by the market. Not to mention that in common law countries (including the US), that haircut was likely very illegal, which may have played a role in this decision.

The fact is, there were no victims in this case. No one lost any value. Withdrawals are operational at Bitfinex and Tether and the USDT dollar peg is holding perfectly fine.

The same cannot be said for the case where balances were haircut and debt tokens issued. If you wanted to immediately liquidate, you had to lock in large losses. If you wanted to wait for repayment, you had to lock your capital into USD-denominated debt instead of bitcoins. That made for a market full of victims.

That's what I mean about protecting Bitfinex and Tether customer interests. They are better off today than if Bitfinex acted strictly by the books -- which probably would have entailed bankruptcy.

They essentially have haircutted customer balances, as everyone currently holding Tether now holds less value than they did before as Tether is no longer backed up.

Didn't the $1 Billion raised in their private token sale cover the insolvency?

Anyway, the market -- and their customers -- don't seem to care. That's really what matters. Tether was proven to be insolvent and the market simply didn't care. In fact, the market injected another $1.3 billion into Tether over the next several months.

They may be shady and unprofessional, but they made this entire problem disappear extremely quickly. If the alternatives were a replay of the 2016 Bitfinex hack or the Mt. Gox bankruptcy proceedings, I prefer the route already taken. I think most users exposed to Bitfinex and Tether counterparty risk would agree with me.

[o_e_l_e_o]

The fact is, there were no victims in this case. No one lost any value. Withdrawals are operational at Bitfinex and Tether and the USDT dollar peg is holding perfectly fine.

They did, though. Many people are still holding, trading, and using USDT under the mistaken assumption that it is backed up 1-to-1 with USD. We know that isn't the case, and that only some of it is backed up with a variety of unspecified "assets". If many people tried to convert their USDT back to USD, there would essentially be a bank run and many people would end up losing value.

Instead of openly haircutting Bitfinex users and issuing debt tokens, they have instead secretly haircutted Tether holders.

Didn't the $1 Billion raised in their private token sale cover the insolvency?

The self-loan from freshly printed Tether came first. My understanding was that the $1 billion raised in useless token sales was to pay back the loan they made to themselves.

Anyway, the market -- and their customers -- don't seem to care. That's really what matters. Tether was proven to be insolvent and the market simply didn't care. In fact, the market injected another $1.3 billion into Tether over the next several months.

I agree with you here, but I think that's a massive problem. Tether can't continue being printed out of thin air with no backup indefinitely. At some point, the whole system will come crashing down, and people holding USDT will suffer massively. With the creation and rise of several other stablecoins, there isn't really a good reason to continue using Tether.

[squatter]

The fact is, there were no victims in this case. No one lost any value. Withdrawals are operational at Bitfinex and Tether and the USDT dollar peg is holding perfectly fine.

They did, though. Many people are still holding, trading, and using USDT under the mistaken assumption that it is backed up 1-to-1 with USD.

How have they lost money?

If many people tried to convert their USDT back to USD, there would essentially be a bank run and many people would end up losing value.

Aside from very short-lived episodes, that hasn't happened. I would argue that the 2016 haircut -- a discreet 36% loss to every single customer -- was much more damaging. I really don't see any comparison.

Instead of openly haircutting Bitfinex users and issuing debt tokens, they have instead secretly haircutted Tether holders.

That gets back to my original question: Which one is really worse?

Didn't the $1 Billion raised in their private token sale cover the insolvency?

The self-loan from freshly printed Tether came first. My understanding was that the $1 billion raised in useless token sales was to pay back the loan they made to themselves.

Not that this matters, but technically they didn't print Tether to make the loan. Bitfinex was insolvent, Tether loaned existing funds to Bitfinex, and Tether therefore became insolvent.

My point is that they swiftly raised the funds required to plug the insolvency and restore market confidence -- which is really the paramount concern of Bitfinex and Tether customers. Bank runs, haircuts and bankruptcies all seem like considerably worse outcomes.

I agree with you here, but I think that's a massive problem. Tether can't continue being printed out of thin air with no backup indefinitely. At some point, the whole system will come crashing down, and people holding USDT will suffer massively.

Honestly, I'm not convinced that Tether has ever been printed out of thin air. I think Bitfinex and Tether have ridiculous legal conflict of interest issues, and I think they operate in a very shady and borderline criminal manner, but after years of watching this drama I just don't buy that claim.

USDT holders are of course exposed to third party custodial risk -- doubly so if they are storing it on an exchange. And yes, the bigger Tether gets the more people it will hurt when it comes crashing down. But that's true of any custodial service -- just ask Mt. Gox customers.

Sometimes I feel like much of the ire pointed at Tether = people venting about third party trust issues that apply to a whole swathe of other services. For some reason, people like to hyper focus on Tether simply because there is transparent blockchain data to point at. When it comes to regular custodial exchanges, no even thinks to ask about an audit.

[Lynfax]

The fact is, there were no victims in this case. No one lost any value. Withdrawals are operational at Bitfinex and Tether and the USDT dollar peg is holding perfectly fine.

They did, though. Many people are still holding, trading, and using USDT under the mistaken assumption that it is backed up 1-to-1 with USD. We know that isn't the case, and that only some of it is backed up with a variety of unspecified "assets". If many people tried to convert their USDT back to USD, there would essentially be a bank run and many people would end up losing value.

Instead of openly haircutting Bitfinex users and issuing debt tokens, they have instead secretly haircutted Tether holders.

Didn't the $1 Billion raised in their private token sale cover the insolvency?

The self-loan from freshly printed Tether came first. My understanding was that the $1 billion raised in useless token sales was to pay back the loan they made to themselves.

Anyway, the market -- and their customers -- don't seem to care. That's really what matters. Tether was proven to be insolvent and the market simply didn't care. In fact, the market injected another $1.3 billion into Tether over the next several months.

I agree with you here, but I think that's a massive problem. Tether can't continue being printed out of thin air with no backup indefinitely. At some point, the whole system will come crashing down, and people holding USDT will suffer massively. With the creation and rise of several other stablecoins, there isn't really a good reason to continue using Tether.

I think something like printing more Tether should not be allowed anyway.
It is pure shilling in huge amounts.
Gov's regulations should come in short and prevent everything like this to happen