Bitfinex

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Founded in 2012, Bitfinex (pronounced BitPhoenix) is the second largest crypto exchange in the world by 24-hour volume. It is preferred by experienced and advanced users for its history of sustainability, innovation, and a wide array of functional tools. Viewer discretion is advised: Bitfinex has been hacked before, so using high-end security is a must.

Specifications

Bitfinex is thought to be rather reliable in the community, even though its procedures can be somewhat complex and time-consuming, which is reasonable considering the large user base.

Globally popular Bitfinex is run by Hong-Kong-based IFINEX Inc. (BVI) and offers some of the most popular and in-demand trading pairs around as well as a massive user base and quite some popularity among seasoned traders.

Bitfinex offers a wealth of options, and for that reason also it is better suited for advanced and intermediate users rather than beginners. The commission is reasonably low plus there is a wide range of highly customizable tools like TradingView and BitFinex API and the function of customizing user functions, daily database backups, a wide selection of order types (Limit, Market, Stop, Trailing Stop, Fill or Kill, One Cancels the Other, Post Only, Hidden*), a vast and detailed KYC/AML procedure, and margin trading. According to Bitfinex, “A hidden order is an order which does not appear in the order book and thus doesn't influence other market participants.”

Bitfinex works well as a liquidity provider, although its main focus is on exchange trading, financed trading, peer-to-peer financing, and over the counter market (OTC). It employs a security company Arcui to regularly audit its system for malpractices or breaches, likely in light of its turbulent history.

Breaches and Security

Following an exchange of words with the US Commodity Futures Trading Commission (CFTC) on June 2, 2016, who investigated alleged trade violations by Bitfinex, on August 2nd, 2016, $60 000 000 was stolen from Bitfinex, the largest reported loss since Mt.Gox.

Bitfinex ended up paying a substantial fine, although it didn’t admit to charges. The CFTC investigated Bitfinex for not registering duly as a futures commission merchant and violating the Commodity Exchange Act by keeping control of the private keys as well as “offering illegal off-exchange financed retail commodity transactions (source):

Bitfinex was also suspected of being behind the theft because of having 2 out of 3 private keys for the accounts.

There were also some decidedly frivolous processes to do with Tether (Jan Ludovicus van der Velde is the CEO of both Bitfinex and Tether, who have been subpoenaed by The U.S. Commodity Futures Trading Commission on Dec 6th 2018 according to Bloomberg.

Redemption

Bitfinex since reimbursed investors with fiat (USD) and employed a staggering array of security measures (below).

Bitfinex boasts not only 2FA, but also Universal 2Factor, which will involve a physical security key, watching user activity for anomalies and “manual admin inspection”, suspicious login detection and instant account freezes, adjustable security settings,  a withdrawal whitelist, the function of creating your own charts, and even immunity to malicious browser software as well as Advanced API key permissions and Email Encryption with OpenPGP and protection from DDOS attacks.

It is reported that less than 0.5% of the funds are in hot storage and “funds in offline cold storage require manual intervention by several members of our management to access”. Bitfinex also states this is not a full list of security measures it has in place, which cannot be divulged for obvious reasons.

Bitfinex also launched an ERC-20 token exchange called Ethfinex.