Securities Arbitration Lawyers BlogCryptocurrency Exchange Bitfinex Suspends Its Operations
Just two months after being sanctioned by the U.S. Commodity Futures Trading Commission (CFTC), Hong Kong-based cryptocurrency exchange Bitfinex — one of the largest Bitcoin exchanges in the world — has now halted all its Bitcoin trading operations until further notice, claiming it has suffered a security breach. According to published reports, the alleged security breach involved the theft of $65 million worth of Bitcoin from Bitfinex users. News of the alleged theft has caused the price of Bitcoin to plummet worldwide by more than twenty percent.
In June 2016, the CFTC issued an Order sanctioning Bitfinex for offering illegal off-exchange financed retail commodity transactions in Bitcoin and other cryptocurrencies. In addition, the Order cited Bitfinex as having failed to register with the CFTC before engaging in any commodity transactions. The Order required Bitfinex to pay a $75,000 civil monetary penalty and to cease and desist from future such violations.
According to the CFTC, Bitfinex permitted its users to borrow funds from other users on the platform so they could trade Bitcoins on a leveraged, margined, or financed basis. However, the CFTC alleged that Bitfinex did not actually deliver those Bitcoins to the traders who purchased them and instead held the Bitcoins in deposit wallets that Bitfinex itself owned and controlled.
Bitfinex’s claim of a security breach brings back memories of Tokyo-based Mt. Gox, a leading Bitcoin exchange that halted its operations in 2014, blaming the disruption on technical issues and cyber-attacks. Mt. Gox later abruptly filed for bankruptcy, claiming debts (including those owed to its customers) exceeding $64 million. Similarly, in November 2015, Florida-based cryptocurrency exchange Cryptsy suspended its operations under claims of technical difficulties and an alleged cyber-attack. Silver Law Group represents hundreds of Cryptsy customers in a putative class action lawsuit in which it has been revealed that Cryptsy founder and CEO Paul Vernon stole and laundered over $8 million of customer assets before he shut down Cryptsy’s website, destroyed corporate records, and fled to China to escape punishment.
If you have invested in Bitcoin or any other cryptocurrency and believe you are the victim of a fraud or a theft of your assets, you might have the grounds upon which to assert a claim to recover your losses. Additionally, if you have entrusted your cryptocurrency to Bitfinex or have traded through its web site and feel you have been misled and lost more than $100,000, gather your metadata and contact Silver Law Group to find out what rights may be available to you.
Silver Law Group is a nationally-recognized securities law firm headquartered in South Florida, with satellite offices in New York and Washington, DC, representing investors worldwide with their claims for losses due to financial misconduct and investment firm negligence in securities litigation and arbitration matters. Scott L. Silver and David C. Silver both have Martindale-Hubbell® Peer Review Ratings™ of “AV” Preeminent for achieving the highest ethical and legal standards. The firm has successfully recovered multi-million dollar awards for its clients. To contact David C. Silver to discuss your legal matter, call toll-free (800) 975-4345 or e-mail him at dsilver@silverlaw.com