Do you plan to get into crypto trading and wondering which exchange you should give a try? Well, read our Bitfinex review to see whether they are a right fit. After reading today’s post, you’ll learn everything there is to know about Bitfinex, including its pros and cons and unique propositions.
But before we jump into all the details, here is a brief overview of Bitfinex.
Bitfinex is one of the top cryptocurrency exchanges out there. The platform kicked off operation in mid-2012, offering cryptocurrency trading services in Hong Kong. They have grown tremendously and have expanded their services outside of Hong Kong.
Throughout this post, we will discuss the exchange, the company behind it, and a few of the controversial issue that has trailed the platform since it started operating.
Bitfinex Review Summary
As we mentioned earlier, Bitfinex is among the leading cryptocurrency exchanges users trust with their digital assets. But while the company has remained largely successful, they have had a fair share of security breaches and allegations in the past. That said, the exchange provides margin and lending options for advanced traders. Unfortunately, the exchange doesn’t currently offer its service to US customers.
Let’s break things down further to capture everything you need to know about Bitfinex.
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- Bitfinex Overview
- Bitfinex Services
- Bitfinex Difficulties
- Currencies and Payment Methods
- Bitfinex Fees
- Supported Countries
- Customer Support and Reviews
- Bitfinex vs. Binance
- Conclusion – Is Bitfinex Legit?
1. Bitfinex Overview
Based in Hong Kong, Bitfinex was founded in 2012 by iFinex Inc in the British Virgin Islands. When the company began, it was a platform for P2P margin lending exclusively for bitcoin. And just for context, Tether, a US dollar-pegged stablecoin, is also affiliated with iFinex Inc.’s founders and management.
2. Bitfinex Services
Bitfinex offers a blend of exciting services that users have come to love. Here is a detailed breakdown of services provided by the exchange.
Advanced Trading Platform
There are no other exchanges in the world with an order book as liquid as Bitfinex. A high volume helps traders to keep spreads low. For those new to all this, spreads simply refer to the differences between the best bid and ask prices.
The Bitfinex website is sleek, user-friendly and easy to navigate. And yes, they currently support over 50 trading pairs (including BTC/ETH). Besides their supported digital asset, the platform also supports several order types, such as a limit order, a market order, a stop order, a stop-limit order, a trailing stop order, and a scaled order.
The trading platform interface is customizable on Bitfinex. Additionally, the platform offers advanced charting tools and API access. This makes it a favourite cryptocurrency exchange with sophisticated traders.
Margin Trading and Funding
On Bitfinex, P2P (Peer to Peer) margin trading, users can trade and borrow with leverage of up to 3.3x. Lending conditions (such as the amount, duration, and interest) can be determined either by the borrower or by Bitfinex automatically.
As a result, cryptocurrency owners can earn interest on their funds by lending them to traders. With the platform, users can finance their projects in a wide range of currencies & assets at the rate and duration they choose.
Note: New traders should avoid margin trading due to both upside and downside risks. Bitfinex locks your funds on margin funding while the loan is in effect.
Over the Counter Services
The Bitfinex over-the-counter trading facility is a good alternative for traders who wish to trade large amounts of cryptocurrency privately ($100,000 or more). Using this service may facilitate several private transactions.
By offering derivatives contracts, Bitfinex gives traders the knowledge they need to speculate on the price of an asset without having to buy or sell the asset outright. For trading, traders only need USDT collateral to back up their derivatives accounts.
Staking and Lending
Finally, Bitfinex offers both staking and lending services. The service allows users to lend or stake their cryptocurrency portfolios with ease, without the need for technical knowledge or staking software.
3. Bitfinex Difficulties
No one can deny Bitfinex has had its share of issues. The first hack of the exchange occurred in 2015 when 1500 Bitcoins were stolen.
Almost 120,000 Bitcoin was stolen from Bitfinex in April 2016, making it the second-largest heist in Bitcoin history, after Mt. Gox lost around 750,000 Bitcoin.
Unlike Gox, Bitfinex restored the client’s funds. The loss was spread across all Bitfinex accounts, even though not all accounts were affected. There was a 36% “haircut” on all accounts.
Following the Bitfinex hack, all clients were fully compensated, at least those who held their BFX tokens, which represented Bitfinex’s IOUs.
It wasn’t over for Bitfinex. Wells Fargo froze Bitfinex’s bank accounts in April of 2017.
For weeks, Bitfinex had to deal with client complaints and pricing distortions of all kinds. As a result of these banking issues, Bitfinex is no longer accepting US dollars and US customers.
In a recent news report, Bitfinex revealed that one of its payment processors – Crypto Capital – had its funds seized by Poland, Portugal, and the USA, resulting in the loss of $850 million in customer funds.
4. Currencies and Payment Methods
It accepts EUR, JPY, GBP, and USD fiat deposits. You can only make fiat deposits by wire transfer. Tether (USDT) is another quasi-fiat that Bitfinex supports.
For Tether use and withdrawals, Bitfinex requires verification. Users who only wish to provide an email address are able to use the exchange with no problems.
5. Bitfinex Fees
The Bitfinex fee model uses a taker-maker design where people who fulfil existing orders are considered takers, while those placing new limit orders are considered makers.
Takers pay 0.2% and large makers pay 0%. OTC trading fees do not apply to large orders.
If you need a quick withdrawal, bank wire fees can reach as high as 1%.
Withdrawals are generally free of charge, but deposits in cryptocurrency can include a small fee.
6. Supported Countries
Based on the Terms of Service and FAQ, the United States is the only country specifically prohibited from using the service.
Bitfinex’s basic services, such as stock exchange, margin trades, and digital asset deposits/withdrawals, can be accessed by anyone, anywhere – as long as you have a valid e-mail account (of course, it’s your responsibility to follow your country’s laws on the subject).
Advanced KYC levels require ‘proof of address and a deeper KYC process. Although the list of eligible countries is not available on their site, you can only find out whether you are eligible once you have gone through their verification process.
7. Customer Support and Reviews
Moreover, Bitfinex provides its users with a knowledge base as well as a ticket system for support. Despite receiving a “poor” rating on TrustPilot, it generally performs well in maintaining user satisfaction.
While there have been numerous criticisms about the exchange throughout the years, many have been related to their close relationship to Tether. There’s always a sense of them hiding something without being able to prove it.
According to the Office of the Attorney General of New York, Bitfinex was accused of concealing $850 million on April 24th, 2018.
Throughout our investigation, we have learned that the operators of the ‘Bitfinex’ trading platform, which also controls the ‘tether’ currency, have conspired to cover up the loss of $850 million in co-mingled corporate and client funds.
A day after the attorney general’s office letter was sent, Bitfinex sent out an open letter to the company’s users denying the allegations.
8. Bitfinex vs. Binance
Binance and Bitfinex support a large number of cryptocurrencies. Compared to Bitfinex, Binance offers an intuitive interface that’s easier to use.
Due to its relatively clean past, the Binance community still views it favourably despite the fact that Binance has only been around since 2017.
Bitcoin community members have concerns about Bitfinex’s hacks, accusations, and connection with Tether. Like Bitfinex, Binance charges a fixed 0.1% fee instead of the taker-maker fee.
Binance seems like a better choice than Bitfinex unless you’re seeking advanced features.
9. Conclusion – Is Bitfinex Legit?
The Bitfinex platform makes sense if you’re not a US-based trader or planning on trading large sums. For those new to cryptocurrency and wanting to get their first coins, Bitfinex is not a good choice.
In addition to the complicated interface and lack of easy deposit methods, it could take time for users to master and may result in costly mistakes. For newcomers, it is recommended they stick with a simpler exchange that offers a few familiar payment methods (e.g. Coinmama, CEX).
However, if you’re a cryptocurrency trader already familiar with the market, Bitfinex probably has all the tools you’ll need and more. This trading platform is great because it offers high cryptocurrency liquidity, margin funding, and leverage alongside multiple order types.
In response to those who are worried about the security of their funds following past hacks, there’s not much to say. It appears Bitfinex has made refunding their customers a priority up until now.
There is also a possibility that the multiple hacks have made the system more robust against future attacks.
Do you have any experience with Bitfinex? Please feel free to share your experience in the comment section.