- Binance to Enter the US Market with Regulated Fiat-to-Crypto Exchange
- Malaysian Bitcoin Miners Stole $25 Million Worth of Electricity
- Bitcoin Price Technical Analysis (August 15): Negative Sentiment Currently Prevails
- Mike Tyson’s Blockchain Startup Vows to Create a Brighter Future for Boxing Athletes
- Walmart Submits Blockchain-Powered Patent for Drone Coordination and Communication
The cryptocurrency exchange Bitfinex is in hot water after it was revealed that nearly $185 million in Bitcoin and Ethereum was withdrawn from the firm’s cold wallets. The news quickly followed the bombshell that was dropped by the New York’s attorney general who accused the owners of the prominent exchange and the stablecoin Tether of using illicit transactions to mask $850 million in missing funds.
While the crypto community hopes for the bear market to end, cryptocurrency exchanges and other major players continue to show either negligence or criminal intent as they lose millions upon millions of their investors’ money. Just in 2018, cryptocurrency exchanges hacks and negligence cost investors across the world over $1 billion.
A cold wallet is an offline cryptocurrency wallet that is used by cryptocurrency exchanges to store reserves of their cryptocurrencies (more about crypto wallets here). These wallets have extra layers of security and are mostly kept offline which protects them from any possible hacks. When crypto funds are extracted from these cold wallets in such large amounts, they are always a cause for concern.
This is especially true for Bitfinex due to the recent allegations leveled against the firm by the New York attorney general. NYSAG claims that $850 million is still inaccessible to Bitfinex and that the firm has failed to publicly disclose the loss of funds. The news of these allegations caused Bitcoin to drop nearly 6% in value and sent waves of panic in the crypto community.
It is important to note that Tether, a stablecoin firm affiliated with Bitfinex and included in the accused by NYSAG, posted an official response to the allegations. The firm claimed that both Bitfinex and Tether are “financially strong” and that the “court filings were written in bad faith and are riddled with false assertions.” Tether also claimed in their response that the $850 million in question is not lost but in fact, seized and safeguarded.
About 17,250 BTC was withdrawn from Bitfinex’s Bitcoin cold wallet and about 633,300 ETH was withdrawn from Bitfinex’s Ethereum cold wallet over the course of last few days. The amount withdrawn adds up to nearly $185 million. Currently, Bitfinex’s Bitcoin wallet still has a balance of over 100,000 BTC which is roughly equivalent to $525 million. Similarly, their Ethereum cold wallet has 633,300 ETH left in it ,which amounts to nearly $96 million.
Analysts failed to determine, at least initially, whether the wallets on the receiving end of these transfers were also owned by Bitfinex or whether these withdrawals are simply related to the funds being extracted by Bitfinex’s customers following the news of the firm being accused of fraud.