- Bitfinex will use its newly released Shimmer tool to identify wash trading and other suspicious market activity on the exchange.
- Reports will be sent to the exchange's surveillance team, which can take action.
- Bitfinex's parent company, iFinex, remains under investigation by the New York Attorney General's office.
Cryptocurrency exchange Bitfinex said it’s looking to limit malicious activity in the crypto space with the help of a new tool called “Shimmer.”
In a press release, Bitfinex announced its latest product will work to combat “market abuse” and promote “orderly trading” in the crypto industry. Shimmer is built to find and investigate manipulative practices and suspicious trades that occur through Bitfinex to keep both customer funds and data safe, thereby establishing market legitimacy.
According to Bitfinex, were Shimmer to find anything out of the ordinary, it would forward details of the alleged manipulation to Bitfinex’s surveillance team. Specialists receive email summaries and are notified of any suspicious trading patterns across all pairs offered on the exchange, allowing them to take the next steps.
“Different actions will be applied depending on the severity of the situation,” explained Bitfinex CTO Paolo Ardoino in a statement to Decrypt. “The purpose of this new tool is to ensure fair and safe markets for everyone, so we will always act in the best interests of the Bitfinex community.”
Among the largest manipulative tactics Shimmer could block is wash trading—in which users purchase and sell assets for the purpose of misleading the market—and layering, where buy orders are used to confuse traders about how much supply and demand exists for a specific token.
There’s concern, however, that Shimmer could be a mirage, given Bitfinex’s ties to the controversial payment processing firm Crypto Capital. Bitfinex reportedly lost close to $1 billion in funds over a year ago. The money was held by Crypto Capital, which claims the funds were seized by Polish, American, and Portuguese officials.
According to an April 2019 lawsuit filed by the New York Attorney General’s office, iFinex—the company that owns both Bitfinex and the stablecoin Tether—illegally used Tether reserves to replace as much as $850 million of the funds that belonged to Bitfinex users.
According to the lawsuit, iFinex also claimed the funds in question had been “seized and safeguarded,” and that the company was doing all it could to get the money released. The Attorney General remains unconvinced. Meanwhile, the company says it paid off another $100 million of the loan from Tether in February.