Bitfinex Shareholder Zhao Dong: Bitfinex Will Survive As Its Name “Finex” Implies
Zhao Dong, a Bitfinex shareholder as well as a bitcoin influencer in China, has been reassuring the crypto community that the exchange is solvent and remains supportive for it after the $850 million Bitfinex bombshell, with his most recent comment on his Weibo (Twitter equivalent in China) being “Although Bitfinex has been suffering a lot, it will always survive just as its name ‘Finex’ (Phoenix) implies.”
The crypto exchange Bitfinex and its stablecoin Tether/USDT (which share the same CEO) find themselves in hot water after the New York Attorney General accused Bitfinex of secretly using Tether’s USD reserves, which should be back the stablecoin, to cover an $850 million fund shortfall.
The day after the news outbreak, Zhao disclosed his conversation with Giancarlo Devasini, Bitfinex’s chief financial officer, who assured him that the situation is fixable and that the exchange needs “a few weeks and the funds will be unfrozen”, “the funds were frozen in several banks in Poland, U.S., and Portugal”. Regarding investors’ concern about the exchange’s insolvency, Zhao added that “Bitfinex generated $400 million in profit with only $12 million spent in 2018; part of the profit reserves is used for clients’ USD withdrawal.”
The crypto space has been roiled following the news and the community has been divided over the fate of Bitfinex and Tether these days.
Optimists believe the exchange can manage to come through it, saying Bitfinex has been in such a plight for several times but always come through in the past, and that they have few better alternatives given that other stablecoins are not so popular as Tether, in which regard, some crypto traders propose it is a good opportunity for crypto exchanges that are set to roll out their stablecoins.
Chinese crypto traders seem to hold a stronger belief in the embarrassed dominant stablecoin, saying it is a good time for them to buy in USDT at lows since FUD news concerning Tether/USDT insolvency repeated in publications may lead to Tether dump. While the latest news did not really affect USDT but sent bitcoin price a bit up. The market shows a USDT still worth 99.5 cents with small vibration.
Critics of Tether allege the cryptocurrency, claiming to have $1 in reserve for every unit of stablecoin issued, was in fact operating a fractional reserve and issuing more tokens than it had backed for. Some recalled the exchange’s hack in 2016 for the recent bitcoin move from addresses connected to the hack and claimed it an inside job, and even went far saying the death of Bitfinex and Tether will be a massive boon to digital assets and cryptocurrency.
— Mike Belshe (@mikebelshe) April 26, 2019
Zhao tried to invest in Bitfinex in 2013 while failed that year. In 2016, he successfully became a shareholder when Bitfinex offered a debt-to-equity scheme after the exchange was hacked in August the same year. At that time, Bitfinex lost 119,756 BTC, worth roughly $66 million or about 18% of what was lost by Mt Gox. In 2015, Wells Fargo froze Bitfinex’s $140 million and the latter had to create a dollar-pegged stablecoin dubbed USDT to solve money flow-related problems. The funds were unfrozen eventually as Bitfinex won the lawsuit against Wells Fargo. Last year, Wall Streeters tried to crack down on USDT but turned out in vain. They meant to do the same this time when the amount of issued USDT set a new high, but they are about to fail once again, Zhao concluded.
As he concluded, “What doesn’t kill you makes you stronger”, will the incident this time make the company “phoenix-like” again? Leave your comment below.