Update on Bitfinex

Bitfinex has made another update to their blog post revealing a bit more information on how they plan to compensate customers for the loss of 119,756 Bitcoins valued at over $60 million at the time of this writing. Bitfinex closed down its trading platform on Tuesday August 2, 2106 after revealing that it had been compromised and lost a substantial amount of user’s BTC.

While the Bitfinex.com website remains down, customers can receive updates by visiting the blog.bitfinex.com site for official updates.

According to the update it appears Bitfinex is going to socialize all losses against “all accounts and assets” to the tune of a 36.067% haircut. While definitely a lot lower than the 60% rumor that was floating around, this still represents a substantial loss to their customers. Bitfinex is holding out hope it can fully compensate users at some future point and indicated they may be issuing a BFX token in the amount of the user’s loss.

The proposed token can be redeemed at some unspecified future time (presumably after Bitfinex has had time to recoup the losses through trading fees) after which a user will have been made whole. Another option being floated by Bitfinex is that the user can possibly exchange the token for shares of iFinex Inc. Personally, I would favor this approach, but it is yet unclear of the exact details.

A copy of the latest update is reprinted below:

Bitfinex Interim Update:
06 Aug 2016 at 03:51 PM (UTC) 0 Comments

Interim Announcement

August 6, 2016

Following the theft on August 2nd, the Bitfinex team has been working tirelessly towards bringing the platform back online in a secure and controlled manner. We have finalized the accounting of losses incurred and are currently coordinating strategic plans for compensating customers.

We intend to come online within 24-48 hours with limited platform functionality. Additional announcements will be made as we progressively enable more platform features and return to full operations. We appreciate that our customers and the public want this handled quickly, but it needs to be done a way in which all assets are secure and immune from vulnerabilities. Every resource is being leveraged to make that happen in a safe and optimal way.

As disclosed in earlier announcements, all withdrawals, open orders, and open funding offers have been cancelled and all financed positions have been settled. Exact settlement prices were published on August 3rd.

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.

We are actively discussing various strategic options with numerous potential investors as part of our strategy to fully compensate our customers. Such discussions, however, are in early stages and will likely take time to play out. In the meantime, In place of the loss in each wallet, we are crediting a token labeled BFX to record each customer’s discrete losses. Tokens will be distributed without release or waiver. The BFX tokens will 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. We are still sorting out many details on this; we will post further updates in the coming days.

Thank you for your continued patience and for the many generous offers of support that we have received over the last several days. Notwithstanding this attack, we continue to believe in the possibilities associated with bitcoin. We will continue to update our customers and the public as and when we can.

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