Author – Sam Reads
The U.S. Commodity Futures Trading Commission (CFTC) sent the exchange a subpoena on 6th December last year. Wells Fargo ended its relationship with the digital currency exchange last year too.
Bitfinex one of the largest crypto exchange confirmed it had opened an account with Dutch financial services company ING. It previously had an account with Wells Fargo, which ended the relationship last year. Since then, the exchange’s banking agreements have been unclear similar as well as its sister company tether.
According to a report by Bloomberg, Harold Reusken the spokesman for ING clarified that Bitfinex was a customer at the bank, but declined to disclose details such as how much it holds or if it provides financial services to other Bitfinex affiliated companies, citing Bank- customer confidentiality. He stated that the bank carries out an extensive due diligence on all its cryptocurrency transactions.
Bitfinex parent company iFinex (incorporated in the British Virgin Isles) refused to comment on the matter.
Bitfinex bank dealings have been shrouded in secrecy as it has been unwilling to provide details on banks it uses to complete its transactions. The ING relationship is crucial to the exchange as it continues to show banks are willing to provide financial services. However, ING relationship with Bitfinex one of the largest crypto exchanges raises questions within the traditional markets, as the exchange deals in an unregulated market and provides small or insignificant financial information.
ING clarified it remains a conservative financial service in regard to the crypto market and it does not facilitate any service that helps customers buy or sell cryptocurrencies directly. However, Reusken stated the bank is testing the Distributed Ledger Technology and it is willing to provide financial services to companies in the chain of cryptocurrencies.
Tether, Bitfinex sister company that runs the Tether coins –digital currency, which claims to be pegged to the dollar received a subpoena last year from the CFTC. The subpoena regards to claims the company states that the coins are backed by dollars in its reserves, which it failed to disclose in an audit.
The Dutch Parliament Questions
Dutch MP Henk Nijboer raised questions to the Finance minister Wopke Hoekstra in relation to ING dealings with Bitfinex and Tether in references to an investigative report – “The Money Trail in Alleged Giant Cryptocurrency Fraud Leads to ING”.
The question mostly involved its dealings with Tether, Bitfinex sister company that runs tether, the second most traded digital coin after the bitcoin. One of the questions relates to a US subpoena sent by the CFTC on the tether backing by dollar reserves.
Henk Nijboer asked
“What if a company misappropriated funds by promising that each tether deposited is backed by a dollar which government or regulatory authority will investigate or intervene?”
Exchange Security and Regulations
The Bitfinex and Tether scrutiny by US regulators comes as exchanges try to improve their security and increase customer efficiency. Two exchanges in South Korea have already been affected by hacking related problems. Regulators in the European Union have been stepping up enforcement of requirements needing exchanges to obtain money transmission license.