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$70 Million Bitcoin Theft (BTC) Leaves Bitfinex Users With Massive Hurt

Bitcoin CURRENCY:BTC

When users log in to their Bitfinex accounts, they will notice a 36% decrease in their bitcoin (BTC) holdings. This is because, following a $70 million bitcoin hack, Bitfinex will spread losses among all of its users. The website did not say how it came to this figure, but noted that if it entered into liquidation then losses would be offset to everybody.

Bitfinex Users Have 36.067% Less Bitcoins (BTC) in Accounts

The digital currency exchange platform confirmed the account reduction on Saturday. The announcement came a few days after hackers stole close to 120,000 bitcoins from the website.

Bitcoin CURRENCY:BTC

Instead of taking more than one-third from just users who were affected by lost bitcoins, Bitfinex said that it would spread the losses to all of the users.

In order to get back that 36 percent, users will receive a new token called BFX that would be equal in value to each user’s precise losses. The token can be redeemed in full by the website or the token can be exchanged for shares in iFinex Inc. It is unknown as to how long the offer is good for.

“After much thought, analysis, and consultation, we have arrived at the conclusion that losses must be generalized across all accounts and assets,” the firm said in a statement. “This is the closest approximation to what would happen in a liquidation context.”

Experts say that the coin wouldn’t suffice. Charles Hayter, CEO and founder of digital currency comparison website CryptoCompare, told CNBC that the losses would irk many of the website’s users. The reason why is because a large number of the account holders have assets other than bitcoins.

“What’s disappointing is that the losses seem to be arbitrarily decided with larger operators being offered sweeteners to keep them trading – and there is little clarity on BitFinex’s company losses,” Hayter told the news outlet.

This move by Bitfinex is also being referred to as a bail-in.

Prior to the hack, the platform was in charge of more than $400 million in monthly trade volumes. However, since the cyber attack, which generated immense interest from media outlets, very little is known about the security breach. The firm’s history has also come into question. The only thing that we know about Bitfinex is that it is located in Hong Kong.

Users are now able to log in to their accounts to check their balances. A large portion of the website remains in read-only mode, which means they can’t withdraw, deposit or trade.

A Brief Look at Bitcoin (BTC)

Bitcoin has had a very interesting few years.

The value of bitcoin is now trading at $588. The peer-to-peer decentralized virtual currency has had a strong 2016. Year-to-date, the cryptocurrency is up more than 35 percent. However, bitcoin is still far from its all-time high of nearly $1,200.

Over the last 12 months, the digital currency has garnered a more credible reputation. Bitcoin has been accepted by Wall Street investors, central banks are encouraging use of virtual currencies, retailers continue to take bitcoins and law enforcement agencies are partnering with bitcoin experts.

Indeed, there are still plenty of public officials that do not view bitcoin as money. Some are continue contending that the digital currency is nothing more than a tool for criminals and illicit activities.

Although there are still hacks and attacks, the amount of cyber thefts has diminished. Avid bitcoiners are coming up with new security apparatuses that protect users and platforms that accept bitcoins.

All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
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Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.

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