Bitfinex customers to share loss after theft of $72m

CRYPTO-currency exchange Bitfinex, which lost $72 million (R984m) to hackers last week, told customers yesterday that they would lose more than 36 percent of the assets they had on the platform but would be compensated with tokens of credit.

The Hong Kong-based exchange said losses from the theft would be shared, or “generalised”, 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 yesterday.

“Upon logging into the platform, customers will see that they have experienced a generalised 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 cryptocurrency exchange, 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, Bitfinex and outside experts dismissed suggestions that the breach was due to the security of the blockchain, the decentralised ledger that tracked every bitcoin transaction, and which traditional banks were considering adopting to increase the speed and transparency of their transactions.

Bitfinex said last week that it expected to “socialise” its losses across bitcoin balances and active loans to bitcoin/US dollar positions. It, however, indicated a wider application of the losses to all accounts, which include other digital currencies. Yesterday, it said customers should be able to log on to its platform within the next 24 to 48 hours.

Blockchain analysis company Chainalysis separately confirmed to Reuters that it was helping track the stolen bitcoins. – Reuters

ZAMBIA