Bitfinex users to lose 36 per cent of from their accounts after last week’s $72 million hack
09 Aug 2016
Hong Kong-based bitcoin exchange Bitfinex, which lost roughly $72 million in a cyberattack last week, has decided to spread its losses among its users. (See: Bitcoin in free-fall after hackers steal $65 mn of the digital currency).
Bitfines, which counts among the world's largest bitcoin exchanges, has decided cut 36 per cent off each of its users' accounts to make up for its losses, rather than consolidate the deficit to users who had lost bitcoins in the hack.
Apart from bitcoins, the cut also applies to cash.
''After much thought, analysis, and consultation, we have arrived at the conclusion that losses must be generalized across all accounts and assets,'' the exchange wrote in a lengthy blog post Saturday.
''Upon logging into the platform, customers will see that they have experienced a generalized loss percentage of 36.067%.''
According to the firm, the users would face a similar situation if Bitfinex chose to liquidate. Bitfinex however, chose to remain silent on the 36 per cent figure, saying it would explain the methodology in full in a separate announcement.
Bitfinex however offered some hope to users in the blog post.
The troubled exchange gave an ''IOU'' to users, saying each customer had been given a recording of their discrete losses. Those tokens would ''remain outstanding until redeemed in full by Bitfinex or possibly exchanged - upon the creditor's request and Bitfinex's acceptance - for shares of iFinex Inc.''
Eventually the tokens would be redeemed for full repayment or exchanged for shares in the exchange's holding company.
The decision comes as a disappointment for customers who held currency other than Bitcoin who originally might have thought their funds were safe.
While the company offered justification of the decision saying that this type of shared loss was similar to what would happen if the company were to fall into bankruptcy liquidation, commentators said it was still pretty unprecedented for an established financial institution to share losses amongst customers, especially when only one ''currency'' was comprised.
