Bitfinex is a cryptocurrency exchange based out of the British Virgin Islands. One of the first crypto exchanges, it declares its mission to be enabling people to transact and interact freely and effortlessly around the world with the help of its state-of-the-art technology.
It aspires to be a global advocate of freedom and accelerate the transition towards a more open and fair world.
A decade after its formation in 2012, Bitfinex published its Freedom Manifesto in November 2022. Launched in El Salvador, the Freedom Manifesto is a public statement of the exchange’s guiding principles and its strategy to deliver its vision of an open and equitable world.
With the Freedom Manifesto, Bitfinex takes three pledges:
- Commitment to building open, peer-to-peer communication solutions
- Working to support the Lightning Network and similar technologies and;
- Support and invest in the Bitcoin community
Bitfinex Overview
Founded in 2012, Bitfinex is one of the oldest cryptocurrency exchanges. It is registered in the British Virgin Islands and owned and operated by iFinex Inc. as a financial technology company. It is one of the largest crypto exchanges and ranks sixth among the top cryptocurrency spot exchanges on CoinMarketCap.
Initially starting as a P2P margin lending platform for Bitcoin, Bitfinex today supports 200 tokens and 400 different spot trading pairs.
Since its inception, Bitfinex has been embroiled in one controversy after the other. In 2015, 1,500 bitcoins were stolen from the exchange after a hack. One year later, in 2016, it suffered another attack, losing up to $65 million.
The same year, Bitfinex had to pay a fine of $75,000 to the U.S. Commodity Futures Trading Commission(CFTC) for offering illegal off-exchange financial retail commodity transactions in bitcoin and other cryptocurrencies. The Commission also found that Bitfinex had failed to register itself as a Futures Commission Merchant(FCM) violating the Commodity Exchange Act.
Bitfinex has moved between multiple banks in several countries after it was cut off by Wells Fargo and its main banks in Taiwan. But no one really knows where the exchange’s money is stored.
Bitfinex is closely associated with the stablecoin Tether(USDT) as they are owned by the same company iFinex. This connection put Bitfinex in trouble when the New York Attorney General in 2019 accused the parent company of misusing Tether reserves to cover up $850 million losses in client and corporate funds.
In 2021, Bitfinex and Tether paid an $18.5 million fine for the same and had to cease trading activity with New Yorkers.
What Services does Bitfinex Offer?
Bitfinex Exchange
The main product in Bitfinex’s suite is its cryptocurrency exchange. It enables different types of transactions such as limit orders, market orders, and stop orders. The platform has a customizable interface and users can get access to advanced charting features and API access.
Bitfinex Lending Pro
Lending Pro is a tool that uses automated technologies to manage to lend based on a user’s specifications and market conditions. It is highly customizable and users can customize the lending strategy for each digital asset. The Lending Pro dashboard is easily navigable and offers users multiple lending modes to choose from.
Bitfinex Borrow
This is a peer-to-peer platform(P2P) where users can borrow funds from other users keeping Bitcoin or Ethereum as collateral. The amount that can be borrowed depends on the type of collateral and the amount owned though there is an overall limit of $250,000.
Bitfinex Pay
Bitfinex Pay allows users to accept payments in cryptocurrencies with zero processing fee. It is flexible and scalable and customers have a wide choice of tokens they can use including Bitcoin, Ethereum, Litecoin, Avalanche, Solana, and Dogecoin.
Bitfinex Honey
It is an open-source toolkit that enhances the functionalities of the main Bitfinex platform. Traders can customize the functionalities of the platform with Bitfinex Honey. It helps traders design custom orders and run multiple algorithmic trading strategies among other things.
Bitfinex Mobile App
Bitfinex now also has a mobile app to facilitate seamless ‘on-the-go’ trading. It provides the full functionality of the Bitfinex platform and enables easy payments with FastPay. Users can easily view their portfolios and trading history and the app also supports complex order types.
Bitfinex Pros
Availability of a Large Number of Cryptocurrencies
Bitfinex supports over 200 tokens and 400 spot trading pairs. It also has 60 perpetual futures contracts listed. Customers can easily find the type of coin they want on Bitfinex.
Low Trading Fees
It has a lower trading fee compared to some of its competitors like Coinbae which charge a flat 1% transaction fee on commerce accounts. Plus, traders on Coinbase can get rebates by using their UNUS SED LEO holdings.
Advanced Order Types Supported
Bitfinex supports many advanced order types and margin trading, derivatives as well as margin funding on its platform. It claims to allow up to 10x leverage trading with access to the P2P funding market
Suitable for Experienced Traders
Advanced traders looking to make the most of their crypto investments would find Bitfinex suitable for their needs. It offers advanced algorithmic order types, a customizable interface, and advanced charting tools among other things.
Excellent Mobile App
Bitfinex’s mobile app is intuitive, clutter-free, and has pretty much all the features of the web platform. Users can quickly send and receive Tether or BTC Lightning with FastPay. It also has the news feed aggregator Bitfinex Pulse that keeps users up-to-date with market news.
Bitfinex Cons
Not Beginner-Friendly
One look at Bitfinex’s website will tell you that it’s meant more for users who have a working knowledge of cryptocurrencies and crypto trading. While beginners can use Bitfinex, it has a steep learning curve and mistakes could be costly.
History of Regulatory Troubles
Bitfinex’s ten-plus years of existence are riddled with regulatory missteps and hacking attacks resulting in loss of funds. It suffered major hacks in 2015 and 2016 and was the subject of investigations by the New York Attorney General for questionable association with the stablecoin Tether.
Not Available in the USA
US-based traders are at a disadvantage since the exchange’s services are not available for use by them due to regulatory issues.
Customer Support
There is no option to immediately get in touch with customer support to get the problems resolved. Customers only have the option to submit a ticket describing their problem.
Account Management
Before trading on Bitfinex, you need to create an account for the same. Do read the exchange’s Terms of Service before opening an account to make sure your nationality and country of residence are supported on Bitfinex.
Step 1
You will see the Sign-Up option in the center of the page as soon as you open Bitfinex’s website. You need to fill in information such as your name, e-mail address, password, country of residence, and referral code(if you have one) as the first step.
Step 2
Enable 2-factor authentication to enhance the security of your account. Then, confirm your e-mail address by clicking on the link sent to your inbox. After that, you can log in again to further update security settings and deposit funds.
Step 3
You can now enable lock withdrawal for new IP addresses, turn on PGP e-mail encryption, and set up a withdrawal confirmation phrase to increase the security of your account.
Step 4
To start trading, you need to fund your Bitfinex account. You can use both fiat currencies as well as cryptocurrencies for this purpose. Among fiat currencies, Bitfinex supports USD, EUR, GBP, JPY, and CNH but accounts need to be at a Full Verified level to deposit them.
Step 5
Make sure your account is at least Basic Plus verified. From 9th November 2022, it is mandatory for new accounts on Bitfinex to be Basic Plus verified to trade and access other available features on the website and mobile app.
Fees- How much does Bitfinex Charge?
Deposit Fees
There is no fee for crypto deposits on Bitfinex. There is a 0.100% fee for fiat currency deposits with a minimum amount of 60 USD or EUR.
Withdrawal Fees
On Bitfinex, different tokens have different withdrawal fees depending on multiple factors. For fiat currency withdrawals, there is a 0.100% fee with a minimum 60 USD or EUR fee.
The fee for bank wire withdrawals is higher at 1.000% with a minimum fee of 100 USD or EUR.
Trading Fees
For crypto-to-crypto trades, there is a 0.100% maker fee and a 0.200% taker fee. The same applies to crypto to stablecoin and crypto to fiat trades.
For derivatives, the maker fee is 0.0200% while the taker fee is 0.0650%. However, it should be remembered that trading fees on Bitfinex can differ due to factors like 30-day trading volume and the amount of Bitfinex’s native UNUS SED LEO tokens held in user accounts.
Margin Funding Fees
Funding providers in the Bitfinex funding market have to pay a 15% fee on all generated funding earnings. An 18% fee is charged on funding earnings if the funding was provided via a hidden offer.
OTC Fees
There are no fees charged on OTC trades brokered by the Bitfinex OTC Desk. Other OTC trades that need to be negotiated for instant liquidity involve a 10 basis points fee on both sides.
Bitfinex Security Ecosystem
Bitfinex states that the security of funds and user information is its top priority. It enables 2-factor authentication for account security using Google Authenticator or a Universal 2nd Factor(U2F) Security Key.
For an extra layer of privacy, e-mails can be encrypted with OpenPGP. Users can also limit access to and withdrawals from their accounts based on IP addresses. Address Whitelisting is also available on Bitfinex to ensure withdrawals cannot go anywhere else.
Bitfinex keeps the majority of funds in offline storage. It states that only 0.5% of crypto assets are available in hot wallets for everyday transactions. In terms of system security, it backs up the platform database in real-time on encrypted hard drives which are replicated in multiple geographic locations.
The exchange’s website says that it is protected from Distributed Denial of Service(DDoS) attacks but does not disclose much information about its security measures for security and proprietary reasons.
However, despite the robust measures employed, Bitfinex has suffered from some major attacks and breaches over the years. In 2015, about 1,500 bitcoins were stolen from the exchange.
The 2016 Hack
In August 2016, Bitfinex was hacked and 119,756 bitcoins(worth $72 million at the time) were stolen from users’ segregated wallets. This hack accounted for 0.75% of all bitcoins in circulation at the time. Bitcoin’s value fell over 23% after news of the attack became public. Trading, deposits, and withdrawals were then halted as Bitfinex investigated the attack.
The exchange later took the decision to generalize losses across all accounts. Bitfinex customers had to lose 36% of their assets to ‘socialize’ or share the impact of the losses across the users. The customers were then compensated with BFX tokens crediting their losses.
These tokens could be redeemed by the exchange or for shares in the company iFinex.
This saga neared its conclusion in 2022 when Ilya Lichtenstein and Heather Morgan were arrested and the U.S. Justice Department seized Bitcoin worth $3.6 billion that the couple had been trying to launder. The recovered bitcoins were a part of the stash that was stolen from Bitfinex in the aforementioned hack.
Before this, in 2015 too, Bitfinex had suffered an attack where it lost 1,500 bitcoins.
Bitfinex and its Association with Tether
Tether(USDT) is a stablecoin pegged to the US Dollar. It is closely associated with the Bitfinex exchange as they have the same parent company iFinex. Critics had been raising questions about Bitfinex and Tether’s relationship as early as 2017.
This all came to a head in 2019 when the New York Attorney General’s office accused Bitfinex of using Tether to move hundreds of millions of dollars to cover up the loss of $850 million to the Panamanian payment processor Crypto Capital Corp. It said that since mid-2017, Bitfinex had no access to banking, misled clients about its liquidity, and that Tether sometimes held no reserves to back its dollar peg.
The dispute was settled in 2021 when Tether and Bitfinex agreed to pay an $18.5 million fine to settle the dispute.
Beyond that, Bitfinex has also been accused of artificially inflating the price of Bitcoin by using Tether.
Customer Service
Bitfinex has a Help Center with comprehensive FAQs to help users get started with the platform. Users can also submit a ticket to get help from customer support via email. Unfortunately, Bitfinex does not have a phone number listed on its website nor does it have a live chat system. Hence, there is no way to get instant support on the exchange.
Bitfinex Customer Reviews
Bitfinex has a rating of 3.2 on Trustpilot with 283 reviews. Positive reviews praise the customer service’s prompt response to submitted tickets, the seamless experience on the exchange’s mobile app and its high liquidity.
Reviews praise Bitfinex’s customer service for a quick resolution to problems
Bitfinex is preferred for its high liquidity and transparent investing
Some customers, however, complain about the long verification process on Bitfinex. Many also point out that while making deposits is easy on the platform, withdrawing those funds is an uphill task.
Reviews describe a negative experience with the exchange’s verification procedure
Some customers find that while deposits are easy, it is nearly impossible to make a withdrawal on Bitfinex
Bitfinex Frequently Asked Questions
Is Bitfinex Good for Beginners?
Bitfinex is not really compatible with the needs of crypto beginners. It is a platform meant more for professional experienced traders. There’s a steep learning curve while using Bitfinex if you’re new to cryptocurrencies. Novices are better off checking out simpler and more straightforward exchanges like Coinbase.
Is Bitfinex a US Company?
No, Bitfinex is not an American. Since 2017, it is not even available for use by US residents. Initially based in Hong Kong, Bitfinex is now registered in the British Virgin Islands.
What is the Minimum Deposit Fee for Bitfinex?
Cryptocurrency deposits are free on Bitfinex. There is a 0.1% fee for fiat deposits with a minimum fee of $60. There is no minimum or maximum amount for deposits for Euro transactions using OpenPayd but there is a €0.50 transfer fee per transaction. Bitfinex also charges a $150 fee in case token recovery is needed.
Is Bitfinex a Centralized Exchange?
Yes, Bitfinex is a centralized exchange. This means that it functions in a manner very similar to traditional stock exchanges. It matches people who want to buy cryptocurrency with people who want to sell cryptocurrency. If you’re familiar with traditional stock exchanges, you can get an idea of what Bitfinex is like though its interface is not exactly the most beginner-friendly.
Bitfinex- Yes or No?
Bitfinex has some good features including advanced trading, high liquidity, and an easy-to-use mobile app. But it also has, to put it succinctly, a shady past. Notwithstanding the multiple hacks, it has been the subject of several investigations and also had to pay fines for multiple violations over the years.
It has also to be taken into account that it is not clear where Bitfinex’s money is kept since it has been moving between a series of banks unable to secure normal banking relationships.
This is not to say that Bitfinex is completely unusable. A savvy trader could perhaps make the most of his investments on Bitfinex but it is better to find another exchange if you’re wary of potential troubles on Bitfinex due to its checkered past of hacks and violations.