Bitcoin Forum

I'm looking for answers here by someone in the know about bankruptcy laws. Bitfinex has lost 120,000 BTC but not their ETH ETC and LTC USD etc. Let's assume they are insolvent which to me seems probable.

Does this mean they have to liquidate all their assets to cover their entire customers equally? So sell off all their alts and then spread the BTC or USD across their customers.


To not make this complex we should replace cryptocurrency with currency i.e look at exchanges in USD EUR and other assets where there is precedent.

This is paramount to trading in the markets right now. Appreciate any help.

That is about 70 Million USD. No company will be able to come up with that kind of Money right away to pay off all their users. Most likely will closed the exchange.

That is about 70 Million USD. No company will be able to come up with that kind of Money right away to pay off all their users. Most likely will closed the exchange.

That is about 70 Million USD. No company will be able to come up with that kind of Money right away to pay off all their users. Most likely will closed the exchange.

I don't think the non-BTC accounts are protected. Even if they were also segregated accounts, the bankrupty of Bitfinex should view all segregrated accounts in equal legal standing, thus they all must suffer proportionally.

The theft is Bitfinex's liability.

So all non-BTC accounts on Bitfinex should be affected proportionally. I presume Bitfinex will eventually realize this. Unless law is somehow different in Hong Kong.

I presume the knee-jerk selloff of BTC is an overreaction. Bitfinex still has significant resources, so everyone on Bitfinex should probably get a loss but not a total loss.

Yes. The sell off is an overreaction. But the problem is there is no buying demand in bitcoins recently so I speculate we will not see this quickly move up above $600 for now. What do you think?

Yes we will. The pumpers are still in control. They are bigger then a few hundred k btc.

But the price of bitcoin was already not going higher anymore before the hack. It was already weakening because there was already a lack in demand. Now the miners will have no choice but to sell more of their mining earnings and savings because of the lower price and the halving of their rewards. This is of course only speculation.

What about those cashing out of the ETC rise? Where can that amount of money go next? Don't tell me Steem as it has insufficient volume and it will debase you 100% over the next several months, unless you power up and commit to 1 year cash out weighted window.

Synereo says they have a launch coming in September, but that can't absorb all those funds can it?

Everything plummeting except for ETC:

http://coinmarketcap.com/

That is about 70 Million USD. No company will be able to come up with that kind of Money right away to pay off all their users. Most likely will closed the exchange.

I do not understand where rise will fit in. In my mind the miners will sell bitcoins for fiat in order to maintain mining operations. Since the price is now lower and the mining reward is halved the miners will now have to sell more bitcoins in the market making it hard for it to come back above $600. It is because the bitcoin price rise was already weakening and it was time for it to go down. It would have still gotten down if the hack did not happen. Just an opinion.

My understanding is that Bitcoins can be traced or otherwise identified, so why couldn't these 120,000 BTC be "banned" by all the exchanges based on some criteria or the identity of the coins that were stolen?

So do the Bitcoin holders lose everything or do Bitfinex liquidate LTC ETH and ETC to cover every customer equally? That was the question.

I do not understand where rise will fit in. In my mind the miners will sell bitcoins for fiat in order to maintain mining operations. Since the price is now lower and the mining reward is halved the miners will now have to sell more bitcoins in the market making it hard for it to come back above $600. It is because the bitcoin price rise was already weakening and it was time for it to go down. It would have still gotten down if the hack did not happen. Just an opinion.

I suppose that those coins went already into other currencies (maybe etc, if you look at the traded volumes yesterday).
This simply went too fast to react on it in any way.
And I do not think that any exchange would willingly reject coins they can make profit with.

That is about 70 Million USD. No company will be able to come up with that kind of Money right away to pay off all their users. Most likely will closed the exchange.

I don't think the non-BTC accounts are protected. Even if they were also segregated accounts, the bankrupty of Bitfinex should view all segregrated accounts in equal legal standing, thus they all must suffer proportionally.

The theft is Bitfinex's liability.

So all non-BTC accounts on Bitfinex should be affected proportionally. I presume Bitfinex will eventually realize this. Unless law is somehow different in Hong Kong.

I presume the knee-jerk selloff of BTC is an overreaction. Bitfinex still has significant resources, so everyone on Bitfinex should probably get a loss but not a total loss.

As I explained (https://bitcointalk.org/index.php?topic=1573507.msg15795468#msg15795468)  four days before, your logic that bankruptcy is required is incorrect because presumably the BTC funds held at Bitgo were not partitioned according to segregated accounts, thus the BTC is part of BTC and non-BTC pool of assets which backs all segregrated accounts BTC and possibly also non-BTC. Your logic would only apply to physical non-fungible assets. Thus even if Bitfinex were not bankrupt, it would still need to spread the loss proportionally to all "segregated" accounts BTC and non-BTC. The concept of segregated account is not to be used for what you are thinking, rather it is to protect the account holder from a lawsuit against Bitfinex which would attempt to grab those assets marked as owned by the segregated account owners. But since these assets are not partitioned by account number, then all of the BTC and possibly also non-BTC accounts are of equal standing w.r.t. to the asset pool. So although Bitfinex would be bankrupt if they could not pay the BTC account holders out of proportional losses for other account holders (BTC and/or non-BTC), they do not have to declare bankruptcy in order to spread the losses proportionally, unless the assets were partitioned by segregated account number. But with a fungible, electronic asset, it seems entirely arbitrary to mark some fungible units for some accounts if all were accessible by the same password set vulnerability. The vulnerability indicates the assets were not partitioned, at least not for all BTC account holders although perhaps one could make an argument that the non-BTC assets were partitioned since they were apparently not subject to the same vulnerability as partitioned. QED.

In other words, the pertinent qualifier is, “segregated from what?”. The crypto assets were segregated at least from the other business liabilities of Bitfinex, but not from each other (or at least not BTC accounts segregated from each other).