Bitfinex never ‘repaid’ their tokens, Bitfinex started a ponzi scheme.

Bitfinex’ed
Oct 28, 2017 · 5 min read

The Chief Financial Officer of Bitfinex, Giancarlo Devasini has a very interesting take on what ‘value’ is.

Apparently, if you owe someone $72 million dollars, and they agree to convert IOU’s into ‘equity’ in a shell corporation you fabricated, your corporation is now worth $72 million dollars!

It’s magic!

Image for post
Image for post

Figuring out ‘Bitfinex Math’

1. Bitfinex gets ‘hacked’ and loses $72 million dollars of their customers funds, then seizes 36% of all user balances.

2. Bitfinex issues a “BFX Token” (aka an IOU) as a dollarized loss to all of their customers.

3. Bitfinex immediately starts trying to convince people holding these IOU’s to convert to equity, or Bitfinex shares, at a value that Bitfinex themselves determined (with no completed audits to establish this value), at $1.00 a share.

4. Bitfinex strongly encourages victims of the hack to convert to equity, and tells them that the fastest way to get their money back… is to convert to equity, and then… sell the shares to another investor.

5. Once enough people fell for this scam, they used the funds they seized from their customers to pay off the ‘hold outs’, or the people who didn’t fall for the scam or couldn’t due to US regulations against scamming people.

6. Bitfinex proudly proclaims that they ‘repaid’ all of their BFX tokens… with equity in an exchange with no functioning banking. An exchange that can’t exchange. Genius.

“The fastest way to get paid back, is to convert debt to shares and then sell your shares to another shareholder”.
Bitfinex Chief Financial Officer, Giancarlo Devasini

That’s not Bitfinex paying anyone back. That’s Bitfinex hoping another investor, bails out the hack victims.

Using new investors to bail-out the ‘old’ investors. The majority of the BFX tokens were in fact converted to equity.

This is known as a ponzi scheme.

Ponzi Schemes are not new to Bitfinex, as their founder tried to create one.

Image for post
Image for post
Image for post
Image for post
Image for post
Image for post
Image for post
Image for post

I’m really curious to who these new ‘investors’ are for Bitfinex, because any accredited investor would immediately see red flags with this kind of arrangement.

Bitfinex creates value out of nothing

Recently, there was a ‘fork’ of Bitcoin, known as Bitcoin Gold. Let’s do a quick search and see what we can find out on this ‘fork’…

Image for post
Image for post

You’ll notice that there’s no activity on the repo, no finished POW implementation, and the code is unfinished. Simply, Bitcoin Gold… DOES NOT EXIST.

However, this doesn’t stop Bitfinex from tripping over their shoelaces to immediately list a fork which doesn’t exist, in order to make money off of suckers.

Image for post
Image for post

As Bitfinex has become more and more desperate, they have listed more and more crypto-currencies of questionable value, such as EOS/IOTA/ETP and so on. How much do you want to make a bet they wanted to sell their own personal stashes of non-existent BTG in order to shore up balances?

Listing a fork which has no functioning implementation really, really takes the cake. Due to Bitfinex listing the fork, the ‘market cap’ of Bitcoin Gold… is a whopping ~$2 billion dollars. In the past week, there have been over $35,000,000 (estimated, lowball) of trading.

Image for post
Image for post

And it doesn’t even exist…

Bitfinex essentially created $2 billion dollars of completely imaginary money, just like they created over $50+ million dollars of imaginary money to pay off the victims of the hack.

Listing theses fake forks also gives people holding Bitcoins an incentive to deposit to Bitfinex, so they can ‘sell’ the worthless BTG to get ‘free money’ to buy more Bitcoin with.

I mean, what could possibly go wrong?

Bitfinex’s primary business is now imaginary money, since Bitfinex also owns Tether… which is also imaginary money.

Image for post
Image for post

Tethers are on the rise

Prior to publishing this post I was informed that Tethers are on the rise. Today, at the time of this post there has been another 25,000,000 USDT printed.

Historically, this usually means there’s another pump on Bitcoin and altcoins pending. Tethers are usually made in batches of over $100,000,000 total.

So expect another dramatic rise in Bitcoin prices (however, there may be a dramatic crash first and the Tethers will be used to pump it back up).

Image for post
Image for post

There Is No Such Thing As Free Money

If Bitfinex is able to list a completely non-existent fork and automatically create $2 billion in perceived value on something that doesn’t exist, I want you to ask yourself what that means for the Bitcoin Market.

Bitfinex could likely list on their exchange “FUD Tokens” bearing my Twitter handle and people would trade them and collectively they’d be worth tens of millions, or hundreds of millions of dollars, after all, their worthless recovery right tokens have a trading value.

Trade carefully.

-Bitfinexed

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch

Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore

Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store