Net Outflows Despite Bitcoin Spike; Court Grants Bitfinex Motion; Poloniex Cuts Altcoins From U.S. Customers

Leading the crypto headlines over the past 24 hours: reports emerged there were more investors cashing out, than in, during the huge crypto price spike this week; Bitfinex had their motion to modify an injunction from the Attorney General granted; and Poloniex made the decision to disable nine altcoin markets for U.S. customers.

The market-wide price rally came to an abrupt halt overnight. At the time of writing, bitcoin (BTC) and ether (ETH) are trading at $7,297.9 (-8.7%) and $239.9 (-8.1%), respectively. Additionally, the MVIS CryptoCompare Digital Assets 10 Index is currently tracking at 3,698.1, a 4.9% rise over the past 24 hours.

Investors Cashed Out Whilst Bitcoin Spiked, Blockchain Data Startup Finds

Despite the substantial price rises seen in the cryptocurrency market this week, there has been more money leaving the market than entering it. That is according to London-based blockchain data startup, TokenAnalyst, who told Bloomberg it estimates withdrawals from trading platforms including Bitfinex, BitMEX, Binance, and Kraken exceeded inflows by roughly $622 million over the past five days.

For Bitfinex in particular, it’s seen customers withdraw more than $1.7 billion worth of bitcoin and ether since April 26, a day after the Supreme Court of New York received a legal petition filed by the New York Office of the Attorney General (OAG). This filing alleged Bitfinex lost $850 million and subsequently used funds from affiliated stablecoin operator, Tether, to hide the shortfall.

New York Supreme Court Grant’s Bitfinex’s Motion to Modify Injunction

Speaking of the OAG’s allegations against iFinex – the parent company of Bitfinex and Tether – yesterday saw the Supreme Court of New York grant Bitfinex’s motion to modify an injunction from the OAG.

According to an announcement by Bitfinex, the “court’s order allows Bitfinex and Tether to continue their normal business activities.” Additionally, the order also states the original injunction by the OAG will expire in 90 days and that any motion to renew will be the responsibility of the OAG.

Poloniex Cuts Off U.S. Customers From Nine Altcoins

U.S.-based crypto exchange Poloniex announced it had chosen to disable the trading of nine altcoins for customers residing in the U.S. The nine altcoins were: Ardor (ARDR), Bytecoin (BCN), Decred (DCR), GameCredits (GAME), NEO Gas (GAS), Lisk (LSK), Nxt (NXT), Omni (OMNI), and Augur (REP).

Poloniex, which was acquired by fintech startup Circle last year, told customers a lack of regulatory clarity in the U.S. was the reason for their decision. Specifically, the crypto exchange explained “it is not possible to be certain whether U.S. regulators will consider these assets to be securities.” Poloniex emphasised the fact the nine altcoins will remain available for trading to customers outside the U.S.

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.