Bitfinex. Will they cover the 65 million dollar BTC Theft or just fold?

[Tzupy]

This may be of interest:
https://www.reddit.com/r/Bitcoin/comments/4w5fdz/collection_of_relevant_bitfinex_corporate/

[JayJuanGee]

This may be of interest:
https://www.reddit.com/r/Bitcoin/comments/4w5fdz/collection_of_relevant_bitfinex_corporate/

Thanks Tzupy bear... . That seems to be a pretty helpful thread to follow and/or contribute to in the event that anyone has useful information.

[MatTheCat]

You are assuming that people are going to lose their coins.  We don't know that, yet.  Sure someone is going to lose, but details are still quite speculative, especially when they are saying that customers are going to be able to verify their accounts and also they are developing plans to go live again at some point in the near future.

If you look on the reddit thread: https://www.reddit.com/user/zanetackett?count=25&after=t1_d64q4dv

Bitfinex are basically going to socialise the loss amongst all those who were holding BTC, or had USD lent out to margin traders, or who had USD tied up in margin short trades, whilst assuming none of the losses themselves. Those who simply had USD sitting on Bitfinex, will not be affected, because basically, that money is sitting in a Dallas bank, was not stolen, and Bitfinex would have no legal right to redistribute that money.

So all Bitfinex users who were active in the market at the time of the hacks, are going to take a hit. Those who simply had USD sitting in their accounts, that was not being lent out, or used in a margin trade, are safe, and of course, according to the rules that Bitfinex have decided to run with, Bitfinex themselves, are safe......lawsuits from a consortium of raging mad whales notwithstanding.

I am sure all those who are going to be forced to take a 60%+ haircut on what might have been their life savings + bank debt, will be delighted to hear that Bitfinex will live to trade another day.... Long Live Bitfinex!   (lol)

[JayJuanGee]

You are assuming that people are going to lose their coins.  We don't know that, yet.  Sure someone is going to lose, but details are still quite speculative, especially when they are saying that customers are going to be able to verify their accounts and also they are developing plans to go live again at some point in the near future.

If you look on the reddit thread: https://www.reddit.com/user/zanetackett?count=25&after=t1_d64q4dv

Bitfinex are basically going to socialise the loss amongst all those who were holding BTC, or had USD lent out to margin traders, or who had USD tied up in margin short trades, whilst assuming none of the losses themselves. Those who simply had USD sitting on Bitfinex, will not be affected, because basically, that money is sitting in a Dallas bank, was not stolen, and Bitfinex would have no legal right to redistribute that money.

So all Bitfinex users who were active in the market at the time of the hacks, are going to take a hit. Those who simply had USD sitting in their accounts, that was not being lent out, or used in a margin trade, are safe, and of course, according to the rules that Bitfinex have decided to run with, Bitfinex themselves, are safe......lawsuits from a consortium of raging mad whales notwithstanding.

I am sure all those who are going to be forced to take a 60%+ haircut on what might have been their life savings + bank debt, will be delighted to hear that Bitfinex will live to trade another day.... Long Live Bitfinex!   (lol)

Thanks.  I read through quite a bit of that thread, too, and I got a lot of the same impression as you regarding their not mixing assets.
 I personally believe that in the end, a representation that they are not mixing assets would likely save bitfinex a lot of complications by NOT mixing different asset classes.. 

Yes, I saw the part about haircut, too, but they did not specify the amount of the haircut.

 if they are conceptualizing scenarios in which their customers are taking losses for their lack of security, then that kind of a conceptualization would have a considerable chance of losing them credibility and good will under their current and potentially future customers.

According to the post, we will find out more of the nitty gritty details tomorrow, no?

[bones261]

You are assuming that people are going to lose their coins.  We don't know that, yet.  Sure someone is going to lose, but details are still quite speculative, especially when they are saying that customers are going to be able to verify their accounts and also they are developing plans to go live again at some point in the near future.

If you look on the reddit thread: https://www.reddit.com/user/zanetackett?count=25&after=t1_d64q4dv

Bitfinex are basically going to socialise the loss amongst all those who were holding BTC, or had USD lent out to margin traders, or who had USD tied up in margin short trades, whilst assuming none of the losses themselves. Those who simply had USD sitting on Bitfinex, will not be affected, because basically, that money is sitting in a Dallas bank, was not stolen, and Bitfinex would have no legal right to redistribute that money.

So all Bitfinex users who were active in the market at the time of the hacks, are going to take a hit. Those who simply had USD sitting in their accounts, that was not being lent out, or used in a margin trade, are safe, and of course, according to the rules that Bitfinex have decided to run with, Bitfinex themselves, are safe......lawsuits from a consortium of raging mad whales notwithstanding.

I am sure all those who are going to be forced to take a 60%+ haircut on what might have been their life savings + bank debt, will be delighted to hear that Bitfinex will live to trade another day.... Long Live Bitfinex!   (lol)

Marvelous, I get to take a hit on my 249.00 USD and .26BTC that was involved in margin lending on Bitfinex. All so Bitfinex can discover that their multi signature wallet scheme with Bitgo was a no go. Thanks Bitfinex, BitGo and black hat hacker. I hope you all find a way to hang yourselves with the 120k BTC.
At least this was nowhere near my life savings.

[The Sceptical Chymist]

Cover it?  I highly doubt that. A normal company would have insurance for this sort of thing, and I doubt bitfinex has anything of the sort.  Any exchange should have security such that this wouldn't happen in the first place especially with bitcoin.  This is just further evidence that the people running these exchanges are fucking morons at best.  Criminals and scammers is a more apt description.

[solarion]

The simple fact that they weren't using a cold wallet layer makes it clear that there were idiots in charge of bifinex (in)security. ...sorry but "CFTC said so" doesn't cut it...the CFTC is a complete joke.

...and for the love of all that's holy I cannot figure out why people continue to STUPIDLY send huge numbers of bitcoins to exchanges and leave them there. How many robberies does it take before people grow a damn brain cell or three?

[Searing]

I would think they would just cut their losses and just file for bankruptcy to not have a slue of lawsuits that are fourth coming.
You don't think people who lost their coins will just sit back and forget that this exchange allowed their funds and undoubtedly their personal information to be stolen and not take legal action is beyond me to believe.

You are assuming that people are going to lose their coins.  We don't know that, yet.  Sure someone is going to lose, but details are still quite speculative, especially when they are saying that customers are going to be able to verify their accounts and also they are developing plans to go live again at some point in the near future.

yeah that is the assumption here is my reply on this in another thread that includes my 'guesses' and the biftinex terms of service link (cached)

https://bitcointalk.org/index.php?topic=1573336.msg15823772#msg15823772

terms of service cache alone less my rant from above (cached original is down)

https://webcache.googleusercontent.com/search?q=cache:DMFWehppBtkJ:https://www.bitfinex.com/terms+&cd=1&hl=en&ct=clnk&gl=us

Their terms of service state in this ONE line all that matters.

There is no guarantee against losses on the Site.

You can read thru the rest of the agreement.....but the users of bitfinex will sue them ...bitfinex will sue bitgo......bitgo will sue back etc etc and what will all come out in the
wash one way or another is again from my previous link above rant..is they will not have the funds to refund even if they wished and bitfinex the corporation will take the fall
and all the users eat the losses etc

imho

the only way out is make a deal with the hacker for 10% loss .....otherwise .....bitfinex will simply go bankrupt imho and wash their hands of it all.

hope I'm wrong and another way out but I just don't see it

[thoth-Atlantian]

They will fold within 6 months anyway.

Are any of you going to send your BTC to a company that would have 120k BTC's sitting out of colds storage?

They cut costs on security and it's the users that are paying for it.

Plus......
 

inside job anyone??? 

[JayJuanGee]

I would think they would just cut their losses and just file for bankruptcy to not have a slue of lawsuits that are fourth coming.
You don't think people who lost their coins will just sit back and forget that this exchange allowed their funds and undoubtedly their personal information to be stolen and not take legal action is beyond me to believe.

You are assuming that people are going to lose their coins.  We don't know that, yet.  Sure someone is going to lose, but details are still quite speculative, especially when they are saying that customers are going to be able to verify their accounts and also they are developing plans to go live again at some point in the near future.

yeah that is the assumption here is my reply on this in another thread that includes my 'guesses' and the biftinex terms of service link (cached)

https://bitcointalk.org/index.php?topic=1573336.msg15823772#msg15823772

terms of service cache alone less my rant from above (cached original is down)

https://webcache.googleusercontent.com/search?q=cache:DMFWehppBtkJ:https://www.bitfinex.com/terms+&cd=1&hl=en&ct=clnk&gl=us

Their terms of service state in this ONE line all that matters.

There is no guarantee against losses on the Site.

You can read thru the rest of the agreement.....but the users of bitfinex will sue them ...bitfinex will sue bitgo......bitgo will sue back etc etc and what will all come out in the
wash one way or another is again from my previous link above rant..is they will not have the funds to refund even if they wished and bitfinex the corporation will take the fall
and all the users eat the losses etc

imho

the only way out is make a deal with the hacker for 10% loss .....otherwise .....bitfinex will simply go bankrupt imho and wash their hands of it all.

hope I'm wrong and another way out but I just don't see it

1) I know that one thing is that you wanted to make a point in respects to my earlier point, (which happened to be 36 hours prior to your citing it), and since this is an evolving issue, it seems a bit inaccurate to cite my 36 hours ago, when new information has come out.

2) reliance on the terms of service may be a bit much because the terms of service are going to be written in a way to protect the company from liability, yet if they want to stay in business or create an impression of solvency, they have to bear some of the burden of the loss of coins (ideally most of the burden) - otherwise they will risk a run on the bank.


3) we are going find out more details regarding their proposed path forward in the next 24 hours, at least that's what they say.

inside job anyone??? 

Sure.. seems very plausible.

[Arrakeen]

Was the hacker taking individual user's btc out of every single hot wallet? Or were users btc addresses merely a proxy from which the site deposited and withdrew to from a single larger address (that was hacked)

I don't really believe anything any more. Could've been anyone.

[Sniper44]

they are going to fold anyways, it may take a long time and they can drag it as long as they want but they will fold on the end no matter what happens.

inside job anyone??? 

my bet is that it was indeed an inside job, and it usually is true too.

[Tzupy]

Latest from zanetackett: Losses will be shared among btc holders and those with USD backing BTCUSD margin positions.

It is not clear if by margin positions they mean only longs or also shorts (in which case  ).

[illyiller]

I'm more interested in how the hacker managed to get the money out of a multi-signature implementation.

My money's on BitGo being compromised. They used a unique 2-of-3 scheme in which they have (or can get) access to 2 of the keys. At least they did two years ago, and I as far as I know nobody heeded the warnings that this was a stupid idea.

If their servers weren't compromised, they may as well have been. Clearly, their entire security infrastructure was bypassed. Auto-signing transactions that appear to have drained upwards of 60% of the client's bitcoin wallets is complete insanity.

If BitGo did not enforce Bitfinex's limits, they are liable for the brunt of this theft. And the lack of communication from BitGo is just pathetic. Everyone who uses a BitGo service (like Kraken, Bitstamp, Poloniex, etc) should fear for their security.

[illyiller]

Latest from zanetackett: Losses will be shared among btc holders and those with USD backing BTCUSD margin positions.

It is not clear if by margin positions they mean only longs or also shorts (in which case  ).

From his earlier comments, I am very confident that USD lenders with funds tied to stolen BTC will take a haircut. He has not been as forthright about BTC lenders in the opposite situation. Based on Bitfinex's logic, BTC lenders with outstanding loans were holding USD debt (for USD which was not stolen). But it's not clear what will happen.

[ivanst776]

Title says it all

Bitfinex. Will they cover the 65 million dollar BTC Theft or just fold?

You can comment here. But please take the Poll.

Myself I'd be shocked if they could cover a 65 million dollar btc loss. But the poll will tell here, so feel free to vote.

I would say that bitfinex needs just some time to see if they can find the stolen bitcoin and I believe that they will continue because they have lots of users and those users doesn't have only bitcoin but also othercoins and/or fiat. It's really sad to see another cryptsy but seems that BitGo and bitfinex have lose some trust with this action.

[marky89]

Title says it all

Bitfinex. Will they cover the 65 million dollar BTC Theft or just fold?

You can comment here. But please take the Poll.

Myself I'd be shocked if they could cover a 65 million dollar btc loss. But the poll will tell here, so feel free to vote.

I would say that bitfinex needs just some time to see if they can find the stolen bitcoin

That isn't gonna happen. The coins haven't even moved, and if the hacker is smart, they won't move them until long after this debacle is done with. He won't be dumb enough to sell on exchanges, given how sophisticated the attack was.

Basically, we are hoping an investor swoops in and re-capitalizes the company. Bitfinex's owners won't like the offers they are receiving (probably in the range of $60mm for full ownership), which is why they are talking haircuts.

Next, we are hoping that owners give back significant profits to make a haircut less painful, while securing a plan to repay the debt over time. Hopefuly this would be accompanied by some level of investor recapitalization, to minimize the amount outstanding and thus, minimize the amount of potential litigants moving against them.

I don't want to see this end in bankruptcy. We've seen what happens with Gox. The bankruptcy industry will bleed the assets down to nothing over years, and at the end, customer depositors will be at the end of a long list of creditors. We will get nothing. That's if you could even find the Bitfinex owners and secure the remaining assets. Big if.

I'm just praying I get something back, and in the next few weeks -- not a few years from now from bankruptcy proceedings.