Bitcoin

Bitfinex users set to lose 36% of their holding in bitcoin hack

Bitfinex users to lose 36% of their holding after bitcoin hack
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Bitfinex users to lose 36% of their holding after bitcoin hack

The digital currency exchange platform Bitfinex has taken more than a third off all accounts following last week's cybertheft of nearly 120,000 bitcoins.

On Saturday, Bitfinex confirmed it had spread losses among all users of the platform, rather than just users who had lost bitcoins. These losses amount to 36.067 percent of each account, although Bitfinex has not yet explained how it calculated this figure.

Bitfinex justified the decision by arguing that if the company was forced into liquidation, losses would have to be spread among all users.

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

Bitfinex allows users to trade in several different digital currencies, including bitcoin, and deposit U.S. dollars in their account.

A total of 119,756 bitcoins, worth $70.5 million at today's price, were stolen as a result of a cybersecurity breach.

A man walks out of a bitcoin retail shop in Hong Kong.
Philippe Lopez | AFP | Getty Images

Bitfinex's decision is likely to disappoint many of the site's users who held assets other than bitcoins, warned Charles Hayter, chief executive and founder of digital currency comparison website CryptoCompare.

"What's disappointing is that the losses seem to be arbitrarily decided with larger operators being offered sweetners to keep them trading - and there is little clarity on BitFinex's company losses," Hayter told CNBC via email.

To compensate users, BitFinex is crediting each account with a digital token that will record how much the customer has lost as a result of the hack. These tokens will either be redeemed in full by the company in the future or they can be exchanged for shares in BitFinex's parent company, iFinex Inc. The statement did not specify any timeframe for the redemption.

"The convertible debt token is a way of kicking the can down the road and finding breathing space for the exchange - it opens up interesting trading possibilities with its junk status as well as a fair few legal ramifications," explained Hayter.

Hayter criticised BitFinex's latest attempt to deal with the situation.

"It's all been desperately scrambled together to give some form of closure - although a lot of their plan has not been fully fleshed out with details thin on the ground," he said.

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