A prominent Twitter-based critic of Bitfinex, AB33, has announced his intention to initiate a class-action lawsuit against Ifinex – a BVI based company of which Bitfinex has previously asserted it is owned and operated by. The announcement of AB33’s desire to seek litigation against the company came shortly after the surfacing of documents revealing that Ifinex had been struck off from Singapore’s Accounting and Corporate Regulatory Authority (ACRA) register.
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AB33 Claims to be Organizing Litigation Against Ifinex
On the 11th of December, AB33 published a post stating his intention to organize a “class action against iFinex.” AB33 accuses the exchange of “market manipulation,” “misleading patrons,” and “publicly trading shares of a private company” illicitly.
Most of the accusations likely relate to Bitfinex’s conversion of BFX tokens into iFinex shares following the major hack suffered by the exchange during 2016. After losing approximately $72 million USD worth of customer funds to the hack, the exchange chose to socialize losses, resulting in the conversion of 36% percent of all customers’ account balances into BFX tokens.
Although the exchange promised to pay back all BFX tokens with a corresponding quantity of USD, Bitfinex quickly began to encourage its customers to convert their BFX tokens into equity in the company. A prominent Bitfinex critic currently facing litigation from the exchange has previously alleged that the exchange continued to encourage the conversion of BFX tokens after losing its banking relationships, asserting that the company withheld said information from its customers and investors investors at the time. AB33 has also accused Ifinex of violating the British Virgin Islands’ laws through issuing shares for an entity registered as a Private Limited Company.
Analysis of Bitfinex’s Recent ETP Flash-Crash
News.Bitcoin.com recently reported on sudden flash-crashes of between 60% – 98% that affected multiple altcoin markets on Bitfinex during the 29th of November. Bitfinex described the events as comprising “panic across multiple markets,” claiming that the exchange’s “protection measures” prevented the markets from “dropping […] further than they did.” The company denied technical issues being the catalyst for the crashes, despite maintaining that the exchange has been under a sustained DDoS attack since late November.
A telegram group is reported to have compiled CSV files documenting the trades executed leading up to and during the recent 98% ETP flash-crash. The group’s analysis concludes that ETP dropped from $3.42 USD to just $0.11 USD in 2 seconds. Furthermore, someone purchased 12,720 ETP at between $2.751 and $3.40 in the middle of the crash, after which the price returned to $0.11 USD before 12 seconds of total market inactivity on Bitfinex.
As such, the group’s conclusions have renewed old concerns that Bitfinex’s orderbooks may not be as liquid as they appear. Said concerns stem from isolated flash-crashes on Bitfinex during 2015 and earlier that invoked speculation that the company was continuing to import the orderbooks of other exchanges to give the illusion offering greater liquidity – a deceptive tactic that Bitfinex’s Chief Financial Officer, Giancarlo Devasini, has previously admitted the exchange used to practice.
Ifinex to be Struck off Singaporean ACRA Register
Shortly before AB33 published the post indicating his intention to pursue litigation against Ifinex, documents circulated online indicating that the company was struck off ACRA’s register in November. The documentation shows that both Ifinex and Renrenbee LTD (formerly Bitfinex LTD) were struck off on the 6th of November.
The ACRA news is seen as significant due to Bitfinex appearing to have not previously informed its customers that the associated companies were registered in Singapore, further intensifying scrutiny surrounding the exchange’s alleged lack of transparency.
What are your thoughts on the increasing scrutiny of Bitfinex and its related companies’ operations? Share your thoughts in the comments section below!
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