Bitfinex to pay clients who lost 36% of assets with tokens

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August 8, 2016

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Bitfinex to pay clients who lost 36% of assets with tokens

Source: Agencies | August 8, 2016, Monday |

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CRYPTO-CURRENCY exchange Bitfinex, which lost US$72 million to hackers last week, told customers yesterday they would lose just over 36 percent of the assets they had on the platform but would be compensated for these losses with tokens of credit.

The Hong Kong-based exchange said losses from the theft would be shared, or “generalized,” across all the company’s clients and assets, widening the group of those affected announced last week.

“This is the closest approximation to what would happen in a liquidation context,” Bitfinex said on its website early yesterday.

“Upon logging into the platform, customers will see that they have experienced a generalized loss percentage of 36.067 percent.”

The company said it would also give all affected clients a “BFX” token crediting their losses that could be redeemed by the exchange or for shares in iFinex, the exchange’s parent company.

Bitfinex said it would explain its methodology in a later update and that it was talking to investors about how to fully compensate its customers.

Hackers stole 119,756 bitcoin from Bitfinex last week in the second-biggest breach of a crypto-currency exchange ever, in US dollar terms. The hack accounted for about 0.75 percent of all bitcoins in circulation.

The exchange is the world’s largest for trading digital currencies such as bitcoin, litecoin and ether, and is used for its deep liquidity in US dollar/bitcoin trades.

It is still not clear how the hackers gained access to the company’s customer accounts.

However, both Bitfinex and outside experts have dismissed suggestions the breach was due to the security of the blockchain, the decentralized ledger that tracks every bitcoin transaction, and which traditional banks are considering adopting to increase the speed and transparency of their transactions.

Bitfinex said last week it expected to “socialize” its losses across bitcoin balances and active loans to bitcoin/US dollar positions. Its statement yesterday, however, indicated a wider application of the losses to all accounts, which also include other digital currencies.

Yesterday, it said customers should be able to log on to its platform within the next 24 to 48 hours.

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Bitfinex to pay clients who lost 36% of assets with tokens

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