BITCOIN FALLS AS PROBLEMS WITH BITFINEX CONTINUE
Bitcoin’s price is down a quarter of a percent after Bloomberg broke the news about Bitfinex.
According to the report, the Commodities and Futures Trading Commission (CFTC) had subpoenaed the people behind Bitfinex. Bitfinex is one of the largest cryptocurrencies exchange in the world.
According to the CFTC, the people behind Bitfinex created a token called tether, which was pegged to the dollar. Each token represented one dollar. However, on close inspection, the company did not have the dollars it claimed to have.
On Wednesday, after Bloomberg published the report, the New York Times followed it up with an article that suggested Bitfinex was propping up the price of bitcoin. According to the report, the company artificially increased and decreased the price of bitcoin instead of letting the market set the price. If this is true, there are limited chances that the company will exist for long.
The implications of a Bitfinex failure would be severe to the cryptocurrency industry because of its size. Some have compared it to the Goldman Sachs of cryptocurrencies.
The concerns about Bitfinex will continue to cloud many cryptocurrencies and bitcoin in particular. Traders will wonder whether other exchanges could be compromised as well thus lead to a sell off. As shown below, in the past couple of days, the price of bitcoin has been in consolidation mode with the price not moving as much as it did before. It has also struggled to recover from last month’s highs.