Hacked Exchange Bitfinex Spreads Losses to all Users

Hacked Exchange Bitfinex Spreads Losses to all Users

Hacked Bitcoin exchange Bitfinex appears to be back online now but faces a backlash from some users after announcing everyone would lose around 36% of their assets as a result of the cyber-attack which shut it down last week.

The firm revealed that almost 120,000 Bitcoin (around $70 million) had been stolen by hackers, although not all customer accounts were affected.

The firm explained:

“After much thought, analysis, and consultation, we have arrived at the conclusion that losses must be generalized across all accounts and assets. This is the closest approximation to what would happen in a liquidation context. Upon logging into the platform, customers will see that they have experienced a generalized loss percentage of 36.067%. In a later announcement we will explain in full detail the methodology used to compute these losses.”

However, each customer will get a token labelled BFX to note their losses. These will either be redeemed “in full” by Bitfinex or could be exchanged for shares in the Hong Kong-based exchange’s parent company, iFinex.

The firm said it is still working out the small print on exactly how this will work and will post further updates in the coming days.

That’s not gone down too well with some customers, who are still in the dark over exactly how the exchange was breached in the first place.

Some argued that shares in the company will be worth little given recent events, while others claimed the exchange’s owners should be sent to jail.

Another demanded a public audit of the affair, claiming someone should launch a class action suit against Bitfinex amid rumors there may have been some insider element to the attack.

However, some have confirmed that even if Bitfinex sought bankruptcy the courts would likely follow the same path and distribute the losses equally between all users.

If nothing else, the incident confirms the highly volatile and risky nature of cryptocurrencies.

Source: Information Security Magazine