Bitfinex was once the largest cryptocurrency exchange in the world. But where is it?
It’s September of 2018 and my third trip to China — this time, for a very particular reason: Bitfinex. Bitfinex, one of the largest cryptocurrency exchanges in the world, is moving massive amounts of Bitcoin volume along with hundreds of altcoins, too… but how do they keep the lights on and the servers running? The two companies — Bitfinex and its sister company Tether, operate under the same parent company, iFinex.
I depart a glorious, sunny Los Angeles fall to arrive in a damp, sweltering, thunderstorm-laden Hong Kong to find iFinex, or any physical remnant of this company dominating the crypto landscape.
My fascination with Finex and Tether — the 1–1 dollar pegged stablecoin owned by Finex — begins a year before. In early December 2017 the Bitcoin charts are volatile. After a multi-year long bear market following the collapse of Mt. Gox (the largest Bitcoin exchange between 2010–2014) and then an extended neutral market, Bitcoin is on a tear — from a mere $4,000 a few months earlier, to $12,000 now. My first purchase of Bitcoin comes in August, so the enormous gains are difficult to fathom: I hadn’t anticipated a bull run at all, and the fear of missing out feels very real.
Fortunately, it’s at this late stage that I stumble upon a Twitter profile by the name of Bitfinex’ed. This anonymous account fills the cryptosphere with unprecedented allegations of corruption, narcissism, and malfeasance — he claims the cryptocurrency exchange Bitfinex, along with the stablecoin it procured, Tether, are propping up the Bitcoin and altcoin space single-handedly, and that without them, Bitcoin would merely be worth a few hundred dollars (or even zero). Many of these statements are hard, if not impossible, to prove; however, he also asks a lot of compelling questions.
For instance, Tether, the “1–1 backed” stablecoin can’t seem to get a proper audit or attestation. Why not? Bitfinex promised a security audit after they were hacked for 119,756 Bitcoin. Where is it? Why didn’t Coinbase, a US-based cryptocurrency exchange with accounts on Bitfinex at the time of the hack, get a haircut like all other Bitfinex customers? How in God’s name did ~31 million Tethers get printed and moved without consent? No one has answers for these seemingly simple questions — and having been attracted to Bitcoin by the mantra, “Don’t trust, verify,” the fact that no one cares begins to profoundly bother me.
As weeks turn into months, my hobby develops into more of an obsession. I can’t stop drudging up old BitcoinTalk forum threads about Finex, Crypto Capital Corp (a Panamanian shadow bank that worked with Bitfinex), subsidiaries, and shells within shells. I open a hundred tabs to display OpenCorporates information and connections within the ICIJ leaks. It’s obvious that there’s some level of obfuscation occurring — but how much of it is normal advantageous corporate loopholes versus intentional is tough to know.
It’s time to put in leg work myself. All signs for Finex HQ point to Hong Kong. Why Hong Kong? Well, numerous tipsters clue me in to the fact that iFinex, Bitfinex, and Tether all have offices located in Hong Kong and were originally incorporated in the economic free zone. Owing to its history as a British colony and the establishment of “one party, two systems,” Hong Kong has long been the first destination for Chinese nationals to dump yuan and convert to pounds or dollars — incorporation is easy, requiring little more than an ID and some cash.
It’s also an international hub, banking center, financial powerhouse, and important port, meaning that money has to move easily, hopefully without too many questions. A series of other gray-market catastrophes (The Panama Papers, legislation to force transparency from Caribbean banking centers, and the Cum-Ex Scandal) force companies that would normally do business elsewhere to establish homes in Hong Kong, and suddenly it doesn’t seem so far-fetched that Bitfinex would locate there.
There are, of course, other addresses for Finex that point to the British Virgin Islands, Panama, and Switzerland, but odds are that these aren’t offices at all, instead, PO Boxes with the express intent and purpose of establishing offshore domiciles for shells and shuffling of funds. Besides, the CEO that no one ever sees or hears from — Jan Ludovicus van der Velde — calls Lantau Island (the largest island in Hong Kong) home. Perhaps there does exist an office in Hong Kong, with employees and executives, to boot.
My friend Griffin, a videographer and editor, agrees to join me and bring his camera equipment so that if we find evidence of Finex — employees we can speak with, a reception desk, anything — we have proof to share with the world.
Hong Kong is as exciting and steampunk as it gets. There’s Ferraris, Lambos, and Teslas on every street corner, while vendors sell their goods and cheap diners offer duck or dumplings. It’s Beverly Hills meets Skid Row, with all the neon and LCD screens of Vegas. Kowloon, where we’re staying in a cramped apartment with minimal amenities, is the supreme essence of everything I imagined Hong Kong to be before arriving: the poorest people living in the toughest of conditions, mixing with the high-finance bros from England, the US, China, and Hong Kong proper, all going to the same open street markets and dive bars.
With three known addresses in hand, we take the MTR (Hong Kong Subway) to Central and walk to the Bank of America Tower.
Address 1: Suite 13/F, 1308 Bank of America Tower, 12 Harcourt Road Central
The Bank of America Tower is a landmark in Hong Kong — not because it’s particularly noteworthy or picturesque, but because it’s located at a major intersection in the financial district, walking bridges flowing into and out of it, bus lanes and busy streets striping its edges. The interior is nothing to write home about, a cross between a mall and a doctor’s office in a multi-storied building.
Somehow we stroll right past the guards by the elevators and ride up to the 13th floor. It isn’t what I expect. There’s no open businesses on either side of the large hallway, and the offices of iFinex are shuttered, a large piece of plywood being used as a door. Behind the inch thick, painted, doorish-thing, we can hear drills and saws, people shouting at one another. It’s a construction site.
When we get back to the first floor, we recheck all the signage and office listings to see if iFinex is anywhere to be seen. It isn’t. We ask the guards if there’s a iFinex somewhere in the building, perhaps unlisted. “No,” they tell us. We move on to a nearby address listed for Bitfinex in the Easey Commercial Building.
Address 2: Easey Commercial Building, Suite 1902, 253–261 Hennessy Rd., Wan Chai
Dark clouds are gathering in the distance, but the weather is still humid and hot. The only sanctuary from the heat is the subway, and even that’s packed to the gills.
When we step into the lobby we’re greeted with a cold, air-conditioned breeze and no guard in sight. We check a board with names and entities, but it’s all in Chinese, and we can’t make heads or tails of it. We stand silently next to a mom and daughter, there to visit a family member. Eventually, looking at the registered office address, we determine Bitfinex Technology Services LTD should be on the 19th floor, suite #2.
The only thought I’d had until we entered the elevator was that there’d be no one at these addresses. Griffin asks me, “What questions do you have?”
“Yeah… Like, what’s the plan once we get in there?”
The elevator opens and the mother and daughter get out. The doors close.
“I… don’t know.” I finally say.
Griffin laughs, “You haven’t thought of any questions?” It’s a stunning and sad revelation. The elevator dings. We’ve arrived on the 19th floor. “Better think fast,” Griff says.
J & C (HK) Business Limited is printed on the opaque window framed within the door. We knock and a faint voice says something in Cantonese. The tonality makes me think we’re welcome. Besides, door’s unlocked. Inside is a small office with a few desks, fluorescent lights, a water cooler, and a printer. In back are two even smaller, empty offices with their doors open. Two 40sish Chinese women stare at us, not sure why we’re there.
“Hi,” I finally say, “we’re looking for Bitfinex. Is this Bitfinex?”
The woman nearer speaks up. “What?”
“Uh…” I start using my hands like an idiot, pointing at the floor and all around, as though it’ll translate better, “Is this Bitfinex?”
“No,” she says.
“Oh…” I ponder my next question for a moment. “Have you heard of Bitfinex? Do you know Bitfinex Technology Services Limited?”
“Yes, yes,” she says, “we do little Bitfinex paperwork sometime.”
“That’s amazing.” It dawns on me this response might come across odd. “Do they ever come in? Do they bring the paperwork?”
She shakes her head, ‘no,’ “Only paperwork.”
“So no Bitfinex employees work here and no Bitfinex employees come in to drop off papers?”
She again shakes her head, ‘no.’
We thank the ladies for their time and take off. “J & C (HK) Business Limited,” it turns out, is not Bitfinex.
Address 3: Room 803 K Wah Centre, 191 Java Rd., North Point
Our next stop is Tether, which supposedly rests on the 8th floor in a glassy, blue, post-modern 1980s chic, behemoth of a building, sitting next to the harbor. Getting in is a little more difficult: we have to explain ourselves to a guard, manning a large, fancy, front desk. We say we’re looking for Tether, give a precise floor and office address, and he smiles and waves us through — though he admits he’s never heard of Tether and doesn’t think it’s going to be where we’re headed.
The same nervous energy as before fills me, but even more. This building is beautiful and classy compared to the last place, if iFinex and Tether do have offices in Hong Kong, in this building, it might be proof that there’s legitimate cash in their reserves. What if they’re willing to sit down for a talk? What if they have billions? What if I see Jan Ludovicus van der Velde? What if they follow us after we leave?
The fears and questions are extinguished.
Gold letters behind a glass door read, “Proxy Management Consultants Ltd.” and “Proxy CPA Co. Ltd. Certified Public Accountants.” We push a buzzer and stand idly with our GoPros for a minute. This office values security.
A Chinese woman, again in her 40s, again surprised to see two Westerners, opens the door enough to speak with us. Her English is perfect. “Hello, can I help you?”
“Yes,” I say, “we’re looking for Tether. This is the listed address. Is this Tether?”
She shakes her head no, “No, no.”
“I see, and do you work with Tether? Are they a client?”
With every question she seems more suspicious. “No,” she says, “I have never heard of Tether. Sorry. Have a nice day.” She shuts the door and walks away.
Griff and I sit in a coffee shop in the lobby of not-Tether HQ. I am defeated. “How’s your coffee?” Griff asks.
“Fine.” It isn’t very good. Neither is the brownie I’m eating.
The tail end of Typhoon Mangkhut is whipping Hong Kong, and it starts pouring. I’m not sure what to make of this or what to do with the knowledge that there is no iFinex, Bitfinex, or Tether — at least in a physical sense.
To many, these details come across as banal or trivial, but that continues to be my motivation for asking for answers from Finex. This group of companies has over ten billion in assets as of writing this piece, yet no one can provide a location where you can find executives or even a receptionist. There’s no one to answer if the money were to go missing. There’s no where to go to voice a complaint. There’s no one and nothing to hold responsible.
But most disconcerting of all is that the cryptocurrency community — a community that prides itself on advocating for trustlessness and verification of facts — refuses at every turn to demand that same level of transparency from a company that’s repeatedly promised it and lied.