Bitfinex Chief Strategy Officer Phil Potter didn’t say much when he quit last week, but the move may be yet another indication that all is not well at the controversy-dogged crypto exchange.
Potter may have referred to the exchange’s recent relocation to the Virgin Islands in a resignation statement published by Reuters:
“As Bitfinex pivots away from the U.S., I felt that, as a U.S. person, it was time for me to rethink my position as a member of the executive team.”
He may also have been alluding to the fact that, given that most crypto tokens may soon be declared securities in the US, a number of exchanges have begun actively pursuing new customers in other jurisdictions.
Bitfinex has been under increasing public and possibly regulatory scrutiny after whistleblowers began accusing the exchange of doing nothing to stop an epidemic of wash trading on its exchange last year.
These criticisms were quickly followed by persistent questions regarding the exchange’s use of the “stablecoin” Tether, a cryptocurrency purportedly backed 1-to-1 by equivalent American dollars held in reserve. Tether is periodically injected onto the Bitfinex exchange in large quantities.
Earlier this month, a professor and grad student at the university of Texas claimed to have found correlations between infusions of Tether onto Bitfinex and a subsequent run up on prices of certain coins on the exchange.
Bitfinex was also subpoenaed last December by the US Commodity Futures Trading Commission, though the exchange downplayed the event by stating they often receive “legal process” from regulators.
Bitfinex has also never completed a credible audit of reserves, though last week, the company released a report of a “randomized inspection” of their accounts conducted by their own law firm.
Over $2.5 billion dollars worth of Tether now circulates on cryptocurrency exchanges around the globe.
Tether gained popularity among crypto-traders in part because it can be difficult to load and unload fiat currencies onto and off of crypto exchanges, both because of sometimes limited bank cooperation and because of periodic overload and procedural failings at exchanges.
Tether can also be easily arbitraged between exchanges using the Internet. This allows traders to move quickly when new and coveted low-cap coins get listed, usually on small international exchanges.
Loading fiat onto and off of an international exchange can take more than 2 weeks.
Tether and Bitfinex share the same CEO, Jan Ludovicus van der Velde, who will temporarily fill in for Potter.
van der Velde told Coinwire in an email;
“Phil has been instrumental in developing our business as a key senior team member over the past four years. Bitfinex will continue to focus on strategic global initiatives while Phil pursues other opportunities.”
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