After being dumped by Wells Fargo last year, there have been numerous rumours about Bitfinex’s banking partner. The exchange firm has managed to keep a secret over how it transfers fiat money, a key component in its structure.
Now, whispers that the cryptocurrency exchange giant Bitfinex has found a banking partner in the Caribbean, are growing louder. Citing three people with knowledge of the matter, Bloomberg reports that the exchange operator has opened accounts at Noble Bank International, a financial institution based in San Juan, Puerto Rico. Notably, Noble does not hold funds directly, instead partnering with Bank of New York Mellon as a third-party custodian.
This is not the first time that the Puerto Rico’s financial institution is being said to be Bitfinex’s banking partner. In March, a report by BitMEX suggested that Noble was likely providing banking services to Bitfinex and Tether — a cryptocurrency startup that issues a USD-pegged token that trades under the ticker symbol USDT.
Bitfinex and Tether are closely related to the extent of even sharing a management team, but the two firms have not discussed the exact nature of their relationship in public. The BitMEX report noted that aggregate financial data indicated that Puerto Rico-based financial institutions had experienced a surge in cash deposits last year, which correlated with both the rapid increase in newly-issued tethers and the growth of the cryptocurrency market as a whole.
New Details Emerge
The current report by Bloomberg quotes an anonymous source privy to the operations of Bitfinex, saying that Noble was ‘almost entirely responsible’ for the increase noted in the BitMEX report, which saw cash deposits rise to $3.3 billion in December 2017 from $191 million the previous year.
Bitfinex has undergone numerous difficulties in its efforts to finding a long-term banking partner, and the firm is said to have bounced around institutions using a string of third-party accounts following the decision by Wells Fargo to close the exchange operator’s accounts.
The lack of transparency on the issue of a banking partner has not served the exchange in the right way. Critics have accused Bitfinex and Tether of underground dealings that have unscrupulously increased the price of Bitcoin and other cryptos.
Tony Arcieri, an independent security analyst, said in January about his suspicion,
I, and many others, suspect Tether is being used to effectively counterfeit hundreds of millions of dollars of perceived value, which are being immediately reinvested into Bitcoin,
In December, the US Commodity Futures Trading Commission (CFTC) reportedly issued subpoenas to Bitfinex and Tether, but the results of the investigation are yet to be released.
Bloomberg indicates that both Noble Bank and Bitfinex declined to comment on the issue and it will be interesting to see how the two institutions will react to the new revelations.
Do you think Noble Bank is the new Bitfinex’s banking partner? Let us know in the comments section.