New York users can still use Bitfinex with a minor fib and a click of a button

A New York-based Bitfinex account holder has revealed it's still pretty easy to transact through Bitfinex as a U.S. user, despite the purported ban of stateside traders.

The user, who has asked to remain anonymous, created an account called "ImaNYresident" and accessed Bitfinex from within the borders of the State of New York. The account holder found users need only select an option saying they are not a U.S. resident to continue using the exchange unabated.

Bitfinex and the New York Attorney General's office have been locked in a dispute over jurisdiction. Bitfinex claims that because it bans New York users, among other reasons, it is not within NYAG jurisdiction.

The NYAG provided evidence in July 7 filings showing New York-based IP addresses were accessing the exchange. Bitfinex's answer came weeks later on July 21, when it claimed the NYAG's filings were misleading. The exchange alleged any New York-based traders were members of foreign Eligible Contract Participants (ECPs), making the customer the foreign ECP rather than its New York-based traders. 

However, the user found that U.S. account holders, including New York residents, can still use the exchange if they're willing to make a single misleading statement of their own.

When the site recognizes an IP as U.S. based, a pop-up appears, informing the user that U.S. customers are required to cease trading and funding activity, close open trading positions, return reserved funding and withdraw balances from the platform. After a grace period, the platform will block services for the U.S.

However, it seems users need only indicate they are not a U.S. resident to circumvent the ban and continue trading. The anonymous user was able to complete transactions over the course of a week while being recognized by the Bitfinex platform as signing in and transacting from New York. The account did, however, find that Bitfinex prompted further Know Your Customer protocols when attempting to purchase LEO, which ultimately prevented the account from purchasing the newly launched exchange token.

Later, the user was able to withdraw the purchased digital assets off the exchange and into a user controlled wallet address; to leave all doubts of actually being a U.S customer, the user left a note on the withdrawal transaction that stated, "I am a NY Resident."

Given a blatant username, repeated IP logins coming from New York (which were not made using a VPN), and a withdrawal note that flatly stated the user was a N.Y. resident, there is evidence that those who identify as non-U.S. residents don't need to provide further verification to access, hold, and withdraw funds from the exchange. It also suggests that Bitfinex's internal compliance over account creation and transaction location currently doesn't offer adequate detection of U.S-based customers.

The Court has yet to rule on whether Bitfinex falls under NYAG jurisdiction. The legal battle began in April, when the office brought a fraud case against the exchange, claiming it co-mingled funds with its sister company, Tether, to cover up an alleged loss totaling $850 million. 

The Block reached out to Bitfinex for comment on this matter, and although they declined to speak for the story, they ultimately responded via their blog.

Correction: An earlier version of this story incorrectly referred to LEO a security token. It is in fact an exchange token.