This thursday a civil suit was filed against Bitfinex, with the New York attorney general making allegations that the cryptocurrency exchange has hidden losses of up to $850 million dollars USD from both clients and customers.
The news has been linked to the recent bitcoin price market dump which may have originated from the Kraken crypto exchange, which saw the leading cryptocurrency lose 10% of its total value, from around $5500 to a new price circling $5000.
The bitcoin price correction came just before the Bitfinex announcement
The interesting thing to note is that the price correction came just before the announcement of the lawsuit by the attorney general was made public. While there is no hard evidence that the two events are linked, the coincidence has left many wondering whether there is indeed a connection.
The news was first broken by the Wall Street Journal at approximately 23:20 ET, and the subsequent crash occurred 21:00, just hours beforehand.
Another reason for the market dip could have been the return of previously stolen bitcoins, after the 2016 hack that saw Bitfinex lose $65 million USD equivalent, which was a total of 35% of investor funds.
Some from the crypto community on twitter have suggested that it was actually Kraken’s ‘illiquid book’ and ‘dirty spillage’ that was behind bitcoin’s price dump.
Whatever the reason for bitcoin’s price crash, the market is still strong and healthy
Whatever the reason behind the price dump, over the course of the last 3 months of positive price action, this is not even a blip in the proverbial radar of bitcoin’s recent ascent. Bitcoin price action has seen a massive rise from around $3900 to at the most $5500, totaling nearly a 50% increase in total price and marketcap.
Despite the price dump, the market is overall performing exceptionally well over the last quarter, and any dip in price now may well be temporary. Any one event such as a lawsuit, returned hacked funds, or an alleged illiquid book, can mean nothing to the billions of dollars that flow freely throughout the entire cryptocurrency markets each day.