Bitfinex Bitcoin exchange decides its customers should help pay for 65
There are a plethora of financial rules in place the regulate how banks can handle your money, but an unregulated digital currency like Bitcoin or Litecoin is the wild west of personal finance. The popular cryptocurrency exchange Bitfinex was attacked on August 2, resulting in the loss of $65 million in Bitcoin. Bitfinex has decided to “generalize” the losses across all its users by taking 36% of their money. Seems a lot like stealing.Bitfinex shut down last week following the hack, issuing a series of cryptic updates on its investigation. Now, the site is on the verge of re-launching with limited functionality. When users log into their Bitfinex accounts, they will see that a whopping 36.067% of their money is gone. That’s what Bitfinex is taking from every account to cover the losses, ensuring that everyone on the platform will have lost the same proportion of their money. It’s like being asked to help pay for the theft of a stereo from someone else’s car just because you were parked in the same lot at the time.The price of Bitcoin took a huge hit following the hack.Many users are understandably enraged over this move. Many of them lost no Bitcoins in the initial hack when they checked their balance before the reshuffling. Now, they’re out a substantial sum. In some cases, users are reporting tens of thousands of dollars lost to Bitfinex’s socialized loss scheme. It’s possible that Bitfinex is on the verge of insolvency following the hack, and this move might be a last ditch effort to avoid a Mt. Gox-style collapse.In place of the 36% loss, Bitfinex is giving each user a BFX token with a value of their total loss. It’s essentially an IOU from Bitfinex that is tradable on the blockchain. The company promises to explain in detail how the BFX tokens will work, but for now they’re completely worthless. Users who are not happy with this setup probably have little recourse as they’d lose a lot more than 36% of their money if Bitfinex goes out of business.Maybe, just maybe, Bitcoin was a bad idea.