Now Reading:
Crypto Market Relieved as $1 Billion Bitfinex Sale Calms Nerves
Full Article 2 minutes read

Crypto Market Relieved as $1 Billion Bitfinex Sale Calms Nerves

Bitcoin no longer trades at a premium on Bitfinex, the cryptocurrency exchange at the center of a funding scandal, now that one of its executives has said it successfully raised $1 billion, which could cover potential losses.

The difference between Bitcoin’s price on Bitfinex and that of other online exchanges, which was around 6% at the start of the month, shrank to a slight discount on Tuesday. The cryptocurrency was at $8,025 per dollar on Bitfinex as of 10:36 a.m. in New York, compared with $8,066 under Bloomberg composite pricing.

The digital coin had been quoted at a premium since April 25, when the New York attorney general accused the company of engaging in a possibly fraudulent “cover-up” to hide $850 million in losses. That undermined confidence in whether Bitfinex could financially support Tether, its stablecoin, which is widely used throughout the $250 billion market as an intermediary in crypto trading.

Small price variations are common among virtual-currency platforms — especially in different countries. Yet the allegations that Bitfinex co-mingled client and corporate funds in a fraudulent way may have driven clients to dump its Tether token and buy Bitcoin, leading to the short-lived premium price for the world’s most-traded digital coin.

Bitfinex premium disappears amid fund-raising

Bitfinex has raised the equivalent of $1 billion in a private token sale to companies and users, Bitfinex Chief Technology Officer Paolo Ardoino said in a tweet on Monday. He was widely re-tweeted by prominent figures including Bitmex founder Arthur Hayes and private investor Alistair Milne, who previously said he was participating in the sale.

The news helped Bitcoin sustain a rally that has more than doubled its price in 2019, sending the cryptocurrency above $8,000 for the first time in about 10 months on Tuesday.

Bitfinex’s Hong Kong-based owner and associates have denied the claims, saying the funds weren’t lost but seized by regulators investigating a related company. Raising $1 billion would help it plug a funding hole and support Tether. The move is similar to Bitfinex’s controversial strategy in 2016 when it raised capital through a private token sale after hackers raided the exchange.

Input your search keywords and press Enter.