Key points
- Bitfinex is one of the oldest cryptocurrency-trading platforms, founded in 2012.
- Bitfinex is widely attributed to Raphael Nicolle. The company’s chief executive is Jean‑Louis van der Velde, and its chief financial officer is Giancarlo Devasini, a co-founder of Tether Holdings Limited.
- Bitfinex offers a range of services for traders and liquidity providers, including a peer-to-peer lending service and tools for programmable trading.
What is Bitfinex?
As of July 2022 Bitfinex ranked ninth on CoinMarketCap by trading volume.
In 2020 Bitfinex executed one of the largest bitcoin transactions—161,500 BTC (about $1.1bn). The fee was 0.00010019 BTC (about $0.68). The exchange’s average daily trading volume is $279m.
The platform supports more than 70 digital assets and four fiat currencies, including the US dollar, euro, pound sterling and Japanese yen.
After registration a user receives a basic verification level, which allows crypto deposits and withdrawals and provides access to the spot and over-the-counter (OTC) markets. Two-factor authentication is mandatory.
An advanced KYC level unlocks margin trading and enables fiat deposits and withdrawals.
Bitfinex’s services are available in most countries worldwide, except Canada, Cuba, North Korea, Venezuela, Iran, Syria and Kyrgyzstan.
In 2017 Bitfinex stopped serving US residents amid tighter regulation of digital assets.
How did Bitfinex start?
Bitfinex’s story traces back to the lesser-known exchange Bitcoinica, founded in 2011.
It offered trading in contracts for difference (CFD, Contract For Difference) on digital assets.
Within a year of launch the Bitfinex exchange suffered several hacks; attackers stole more than 60,000 BTC (~$297,000 at 2012 rates).
Bitcoinica later ceased operations. Users accused the exchange’s founder—17-year-old Zhou Tong—of theft.
Less than a year later Bitfinex emerged, whose developers used Bitcoinica’s source code as the basis for the new trading platform.
Who founded Bitfinex?
Bitfinex is a subsidiary of iFinex Inc. It is incorporated in the British Virgin Islands, with the trading platform headquartered in Hong Kong.
In 2018 Bitfinex and iFinex planned to relocate to Zug, Switzerland.
Bitfinex is widely attributed to Raphael Nicolle. Little is known about him online. He previously supported the activities of the creator of the BCS&T (Bitcoin Savings & Trust) fund, known as Pirate@40, who was arrested in late 2014 for a bitcoin-related fraud scheme.
According to the Bitcointalk forum, Nicolle planned to create an investment scheme that would guarantee a weekly deposit rate of 2%.
According to the official page on Bitfinex.com, the company’s CEO is Jean‑Louis van der Velde and the CFO is Giancarlo Devasini.
The latter was born in Italy and trained in medicine at the University of Milan.
Devasini traded computer hardware for a long period. In 2012 he was selling DVDs on Bitcointalk for 0.01 BTC, promising free shipping for bulk orders, and in 2013 he joined the Bitfinex team.
The same year Jean‑Louis van der Velde joined Bitfinex. A Dutch native, he studied at the National Taiwan Normal University and worked in technology for more than 30 years.
Philip Potter served as chief strategy officer, but left in 2018.
How is Bitfinex linked to Tether?
Tether (USDT) is a stablecoin issued by Tether Limited in 2015.
In 2017 the Paradise Papers investigation uncovered links between Tether Limited and Bitfinex. In 2014, in the British Virgin Islands, Potter and Devasini registered Tether Holdings Limited.
The documents indicate that Jean‑Louis van der Velde was CEO of Tether Ltd, Potter served as a director and Devasini was a major shareholder. Ron Torossian, a representative of Tether and Bitfinex, acknowledged the link between the companies.
In early 2019 the New York attorney-general brought charges against iFinex Inc., alleging that Bitfinex concealed the use of Tether Limited’s capital to compensate for a loss of funds that occurred during the transfer of $850m to the Panamanian processing service Crypto Capital. The assets belonged to the company and its clients.
In early 2021 Bitfinex repaid the principal debt to Tether and settled the dispute with the authorities. Investors nonetheless filed a class action against the stablecoin issuer, accusing it of improper conduct.
In 2022 one of the defendants in the Crypto Capital case pleaded guilty to “shadow banking”. The company’s founder remains at large.
What services does Bitfinex provide?
Bitfinex.com offers spot and margin trading in digital assets, derivatives, margin funding, an OTC option, as well as a virtual paper-trading account.
The platform’s ecosystem includes:
- the Bitfinex mobile app, available for devices on iOS and Android;
- Lending Pro — a customisable tool with advanced features for margin trades;
- the P2P lending platform Bitfinex Borrow, where loans in bitcoin and other cryptocurrencies can be made and taken. Digital assets are used as collateral, including Bitfinex’s utility token UNUS SED LEO (LEO);
- Bitfinex Pay — a service that enables acceptance of cryptocurrency payments;
- Bitfinex Terminal — a real-time market-data terminal that runs over the Dazaar network;
- Bitfinex Honey Framework — a suite of tools for programmable trading. It is a library of algorithmic orders that enables complex trades via Bitfinex and the creation of trading bots.
What is UNUS SED LEO (LEO)?
In 2019 Bitfinex published the whitepaper for the UNUS SED LEO (LEO) token. The venue raised more than $1bn via an IEO and covered the $850m shortfall arising from the Crypto Capital situation.
LEO is the utility token underpinning the Bitfinex ecosystem. Holders receive 15–25% discounts on trading fees, as well as additional bonuses: more favourable margin-lending terms, deposit and withdrawal conditions, and an enhanced affiliate programme.
The same year Bitfinex announced a burn mechanism. To that end iFinex conducts token buy-backs from the market. The process can be tracked on the website in real time.
What is known about the biggest Bitfinex hack?
The platform has suffered multiple breaches. One of the largest occurred in August 2016, when hackers stole 120,000 BTC.
Bitfinex used multi-sig wallets. One private key was managed by BitGo, and two others by Bitfinex. The platform’s API key was compromised.
As a result of the attack more than 36% of users’ assets were stolen. The platform issued the BFX token, granting clients the right to potential reimbursement of unauthorised withdrawals. The measure helped the company weather the breach.
Bitfinex bought back the tokens at 1 BFX:$1, or converted them into shares of parent iFinex Inc. Users who converted BFX into securities received RRT tokens.
In 2017 the exchange announced the redemption of BFX tokens and full settlement with all clients affected by the theft.
Who was behind the 2016 Bitfinex hack?
Immediately after the incident the Bitfinex team offered a reward of up to $3.6m for help in finding the stolen digital assets.
Only in 2022 did US authorities detain those involved in the hack. They turned out to be a married couple — Ilya Lichtenstein and Heather Morgan. They were found thanks to the shutdown of the darknet market AlphaBay.
The US Department of Justice said it was the largest seizure of digital assets in the department’s history — 94,636 BTC ($3.6bn).
If convicted, the pair faces up to 25 years in prison. In February Morgan was released on $3m bond. Lichtenstein remained in custody.
The trading platform aims to recover the seized cryptocurrency, co-operating with US authorities. If the digital assets are returned to the exchange, the company is obliged, within 18 months, to use 80% of the amount received to buy back and burn LEO tokens.
Further reading
What are stablecoins?