There is a huge price difference between Bitfinex and other exchanges, and it seems that Bitfinex is repeating the bankruptcy of Mt Gox.

Golden Finance News - Over the past week, many Bitcoin traders have been discussing the significant price differences between Bitcoin exchanges around the world. Most notably, the gap between Bitfinex and most other exchanges is quite large.

The price difference between Bitfinex and other exchanges is quite large recently. Image source: Golden Finance

Currently, the price gap between Bitfinex and other Bitcoin exchanges is about $110. Bitfinex's price has fluctuated wildly over the past five days since the exchange suspended deposits and withdrawals of U.S. dollars.

Such a huge price difference and the suspension of withdrawals have made many Bitcoin traders suspicious of Bitfinex because they associate it with the previous bankruptcy of Mt Gox.

On April 23, the price of the coin on Bitfinex reached a high of $1,359. Image source: Golden Finance

Mt Gox price discrepancy in 2013

At the beginning of the Bitcoin bull run in 2013, the entire Bitcoin industry developed rapidly, and the price of Bitcoin began to rise sharply that year. At that time, Mt Gox set the largest price difference between Bitcoin exchanges. However, during this period, warnings about the bankruptcy of Mt Gox had begun to spread.

In light of the events at the Mt Gox exchange, many Bitcoin traders view excessive price discrepancies as a negative phenomenon.

The price of Mt Gox exchange coins also far surpassed other exchanges. Image source: Golden Finance

Economist and author Claude S. Graf wrote an article about the Mt Gox bankruptcy titled “A banking risk premium: Mt. Gox XBT/USD spread over Bitstamp.” When the spread occurred, Graf noticed that Mt Gox users were having trouble withdrawing their USD.

“According to user feedback, while Bitstamp is still able to quickly process fiat currency deposits and withdrawals, Mt Gox deposits and withdrawals are experiencing difficulties. More and more Bitcoin traders are realizing that it seems impossible to withdraw US dollars from Mt Gox.”

Graf explained at the time.

“Buying and selling Bitcoin from the Mt Gox Bitcoin exchange is a simple, fast and free process that is perceived as stable and reliable. As a result, Bitcoin has incurred an exchange premium and has been significantly undervalued against the U.S. dollar due to the relative low risk and withdrawal costs.”

Willy and Markus

The Bitfinex Bitcoin exchange is currently experiencing difficulties in depositing and withdrawing U.S. dollars, which has led to a sharp increase in the price of the exchange's currency and a trend of huge price gaps.

Mt Gox exchange was exposed to have someone manipulating the price of coins to rise. Image source: Golden Finance

However, a key difference between Bitfinex and Mt Gox is that the Mt Gox exchange used a trading bot called "Willy." The bot was discovered in September 2013, but attracted attention the following December.

In December 2013, the price of Bitcoin on Mt Gox hit an all-time high among global exchanges. There was a significant price difference between Mt Gox and other companies.

——1242 USD (Mt Gox ATH)

——1163 USD (Bitstamp ATH)

——1175 USD (Bitfinex ATH)

In an exposé called the “Willy Report,” some Bitcoin advocates noted activity specific to the Mt Gox exchange. It was subsequently discovered that two traders named Willy and Markus had been actively and regularly raising the Bitcoin premium on Mt Gox starting on September 27, 2013. According to the researchers who wrote the report, the Willy account continued to trade on the Mt Gox exchange until January 2014.

“Based on my personal observations, Willy continued to be active until January 26th: buying 10-20 bitcoins every 5-10 minutes, about 100 bitcoins per hour.”

There does not appear to be any evidence that Bitfinex is suffering from the same attack as Mt. Gox. In fact, the exchange is vehemently denying bankruptcy, explaining that other trading platforms have experienced the same banking difficulties.

"We would like to once again apologise for this ongoing inconvenience and assure our customers that we are making every effort to resume normal operations."