[OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading

[blueberry]

My question here is, What happened to the money hackers stole? who paid it?

The hackers didn't steal anything according to the Bitfinex announcement. The hackers would have had to withdraw the bitcoins/litecoins. Maybe they managed to withdraw a few from the hotwallet but the amount (if any) is probably very small and and loss would be covered by Bitfinex.

The main issue is if the trades are not reversed then it is inevitable the hackers will then proceed withdraw their gains when withdrawals are enabled again. It is virtually impossible to determine all the accounts the hackers would have controlled at the time (other than the one which exploited the bug and executed the huge market orders).

Most likely they would have set up multiple accounts and placed buy limits for litecoin at say $16 and sell limits at $22 just before the hack. Then with their main account they would manipulate the LTC ticker exploiting a bug/security vulnerability in the trading engine and place a huge market sell for LTC down to $16 (so their other accounts can buy cheap LTC at $16) followed by a huge market buy to $22 (so their other accounts can sell at $22 with a quick profit). Repeat this a few times as has happened and they would most likely have made a few hundred thousand dollars worth of LTC.

The main account of the hacker executing market orders would be easily determined by the admins and then the account frozen, however the other accounts of the hacker which placed the limit orders would be extremely difficult to determine, unless the hacker was stupid enough to use the same IP's as the main account (extremely unlikely).

The only choice the admins are left with would be to reverse all trades during the period so the hackers don't get away with anything, whilst simultaneously reinstating all accounts that would otherwise not have been affected if it wasn't for the hacks.

Also, many users who would not have otherwise lost or get stopped out, or end up with negative balances would be justified in having all trades reversed. Those trades which made a huge profit due to the fraudulent trades of the hacker will also have to be reversed. There is no way around this. Nobody loses, all accounts are reinstated back to before the attacks. The only people complaining are the ones who lost out on an unfair profit (which should not have been realized under any normal market circumstances). This is fairest solution considering everything and it is impossible to please everyone. There will always be complainers.

[Arthur Randolph]

Hi jbssm,

In light of your legal proceedings, it is in your best interest to abstain from making comments on a medium subject to legal discovery. Anything that you say here can be distorted in a court of law by Bitfinex lawyers. Quietly gather proofs and then make a case to a judge. Your lawyer will thank you for it.

These guys do have bank accounts on EU that they use to transfer the funds and for want I see some of them live here. Just because it's not regulated it doesn't stop being a liability under the law in Europe.

Yeah but you can't sue them for stealing your money, because they didn't. That a trade in cryptocurrency malfunctioned or was turned back is not something you're going to find regulated to the point you can ask for compensation.

And let's be honest, you're not really going to sue anyone, it's not a positive value move. It's just a lot of noise because you're unhappy but realistically there is nothing you can do but hope the people running that site give you some compensation, if they feel like it.

Let's be serious. For the amount of money I have to loose from this. I'm surely as hell suing these guys and first I'll start by making a complaint at the police.

You fail to realize, that I wasn't trading in crypto anymore. The trade was done, and my money was in dollars. Dollars is not a crypto currency and last time I saw, it's heavily regulated. So they didn't take my BTC (LTC actually) they took my dollars. That's a crime under any law.

You (or someone) gave the example of Coinbase and how the site went down and how people lost their money and that I just have to live with it? Oh well, turn on the news... the guy is under arrest and was pending trial last time I checked.

[blueberry]

My question here is, What happened to the money hackers stole? who paid it?

The hackers didn't steal anything according to the Bitfinex announcement. The hackers would have had to withdraw the bitcoins/litecoins. Maybe they managed to withdraw a few from the hotwallet but the amount (if any) is probably very small and and loss would be covered by Bitfinex.

The main issue is if the trades are not reversed then it is inevitable the hackers will then proceed withdraw their gains when withdrawals are enabled again. It is virtually impossible to determine all the accounts the hackers would have controlled at the time (other than the one which exploited the bug and executed the huge market orders).

Most likely they would have set up multiple accounts and placed buy limits for litecoin at say $16 and sell limits at $22 just before the hack. Then with their main account they would manipulate the LTC ticker exploiting a bug/security vulnerability in the trading engine and place a huge market sell for LTC down to $16 (so their other accounts can buy cheap LTC at $16) followed by a huge market buy to $22 (so their other accounts can sell at $22 with a quick profit). Repeat this a few times as has happened and they would most likely have made a few hundred thousand dollars worth of LTC.

The main account of the hacker executing market orders would be easily determined by the admins and then the account frozen, however the other accounts of the hacker which placed the limit orders would be extremely difficult to determine, unless the hacker was stupid enough to use the same IP's as the main account (extremely unlikely).

The only choice the admins are left with would be to reverse all trades during the period so the hackers don't get away with anything, whilst simultaneously reinstating all accounts that would otherwise not have been affected if it wasn't for the hacks.

Also, many users who would not have otherwise lost or get stopped out, or end up with negative balances would be justified in having all trades reversed. Those trades which made a huge profit due to the fraudulent trades of the hacker will also have to be reversed. There is no way around this. Nobody loses, all accounts are reinstated back to before the attacks. The only people complaining are the ones who lost out on an unfair profit (which should not have been realized under any normal market circumstances). This is fairest solution considering everything and it is impossible to please everyone. There will always be complainers.

Bullocks. You open a short for LTC at 22, you place a closing at 19 (price that was reached in BTCe for instance) and now the price is back to 20.50 so you can't short at 19 anymore.
Yet now they want to take the money you made with a perfectly legit profit. Explain how nobody looses with this like you said?

If things were running as normal you would not see LTC at 19 or 22 during the period in question. LTC/USD traded within a tight range of 19.76 to 20.45 (pretty much sideways) at btc-e during this period. Now if the market fluctuated 19 to 22 at btc-e during this period then you would have an argument. But this did not happen.

you place a closing at 19 (price that was reached in BTCe for instance)

19.76 was the lowest at btc-e. Try harder.

[lysr]

Let people take profit from the incident and compensate people who took losses with your own pocket, that's the most fair way to treat your innocent customers because the incident was caused by your sole mistake. You will most likely make back the money in a few weeks of time, why risk your reputation for a small amount of money.

[F-bernanke]

Please jbssm, just quit whining, you spam all over reddit and this page because you missed out on some profit.

meanwhile, there are people fearing to get completely wiped out.

[Lonechaos]

Can people stop using hack or hackers for this event. It was a bug in the trading platform software that probably wasn't discovered till recently.

[thunderblt]

If things were running as normal you would not see LTC at 19 or 21 during the period in question. LTC/USD traded within a tight range of 19.76 to 20.45 (pretty much sideways) at btc-e during this period. Now if the market fluctuated 18 to 22 at btc-e during this period then you would have an argument. But this did not happen.

Come on, I sold it right on panic buy, I could have easily sold @21 if the hack didn't happen, but they handed me a $20 LTC. Thanks god it didn't tank more or my loss would be big. The thing is, I lost money for doing the right move, do you understand?

[btcdrak]

The apologists will never get it. They apologise for Gox, for BFL and now for this. They will go on and on - they of course are not successful or big traders, there is no money where their mouths are and they will never change their opinion. So just leave it. Do what you need to do. I gotta love the long reply from someone using technical trader risk language - all of which misses the point. But I just gotta bite my tongue.

[gizmoh]

Can people stop using hack or hackers for this event. It was a bug in the trading platform software that probably wasn't discovered till recently.

The bug didn't come up by itself, someone exploited a vulnerability and deliberately put a fake order. It is a hack, there is no other word to describe the event.

[blueberry]

If things were running as normal you would not see LTC at 19 or 21 during the period in question. LTC/USD traded within a tight range of 19.76 to 20.45 (pretty much sideways) at btc-e during this period. Now if the market fluctuated 18 to 22 at btc-e during this period then you would have an argument. But this did not happen.

Come on, I sold it right on panic buy, I could have easily sold @21 if this hack didn't happened, but they handed me a $20 LTC. Thanks god it didn't tank more and my loss isn't really big. But I still lost money for doing the right move, do you understand?

I edited my response to jbssm's post and meant 22 the price jbssm sold at. 21 is borderline and you might have an argument, but 20.45 was the highest at btc-e at the time (check the history at btc-e) and hitting 21 at bitfinex would have been unlikely. But as I say there is no solution to please everyone. There will always be a few who feel unjustified by this but that's life. Accept it and move on.

[F-bernanke]

Instead of man up and tell this guys the right thing to do it to put thing right

The right thing to do is a rollback, everything that happend was completely unrealistic. Do you seriously think bitfinex has the funds to make everybody happy including the rats?

[urwhatuknow]

If things were running as normal you would not see LTC at 19 or 21 during the period in question. LTC/USD traded within a tight range of 19.76 to 20.45 (pretty much sideways) at btc-e during this period. Now if the market fluctuated 18 to 22 at btc-e during this period then you would have an argument. But this did not happen.

Come on, I sold it right on panic buy, I could have easily sold @21 if this hack didn't happened, but they handed me a $20 LTC. Thanks god it didn't tank more and my loss isn't really big. But I still lost money for doing the right move, do you understand?

I edited my response to jbssm's post and meant 22 the price jbssm sold at. 21 is borderline and you might have an argument, but 20.45 was the highest at btc-e at the time (check the history at btc-e) and hitting 21 at bitfinex would have been unlikely. But as I say there is no solution to please everyone. There will always be a few who feel unjustified by this but that's life. Accept it and move on.

First I was giving an hypothetical example, values may vary, but you can easily find scenarios where it incurs in a loss.
Second, I entered the short already 4-5 days ago when the price when high, not last night.

I haven't checked your position yet as we are still busy getting things back in place, but according to your statements you "lost" 3 usd per LTC.
Can you please declare how big was your trade?
We might be up to a "much ado for nothing" situation here.....

Thanks

Giancarlo
Bitfinex Team

[thunderblt]

I edited my response to jbssm's post and meant 22 the price jbssm sold at. 21 is borderline and you might have an argument, but 20.45 was the highest at btc-e at the time (check the history at btc-e) and hitting 21 at bitfinex would have been unlikely. But as I say there is no solution to please everyone. There will always be a few who feel unjustified by this but that's life. Accept it and move on.

$21 Unlikely? I'm not agree with you there, Bitfinex always swings more than btc-e on big moves, go check history. Anyway, you're right hopefully I will cover the loss in next trades, but I'm just curious how would they handled this if my loss was big.

[blueberry]

If things were running as normal you would not see LTC at 19 or 21 during the period in question. LTC/USD traded within a tight range of 19.76 to 20.45 (pretty much sideways) at btc-e during this period. Now if the market fluctuated 18 to 22 at btc-e during this period then you would have an argument. But this did not happen.

Come on, I sold it right on panic buy, I could have easily sold @21 if this hack didn't happened, but they handed me a $20 LTC. Thanks god it didn't tank more and my loss isn't really big. But I still lost money for doing the right move, do you understand?

I edited my response to jbssm's post and meant 22 the price jbssm sold at. 21 is borderline and you might have an argument, but 20.45 was the highest at btc-e at the time (check the history at btc-e) and hitting 21 at bitfinex would have been unlikely. But as I say there is no solution to please everyone. There will always be a few who feel unjustified by this but that's life. Accept it and move on.

First I was giving an hypothetical example, values may vary, but you can easily find scenarios where it incurs in a loss.
Second, I entered the short already 4-5 days ago when the price when high, not last night.

You entered the short limit order into the orderbook 4-5 days ago but it only executed last night? Or did your short get executed 4-5 days ago? Please make this clear.

[btcdrak]

Instead of man up and tell this guys the right thing to do it to put thing right

The right thing to do is a rollback, everything that happend was completely unrealistic. Do you seriously think bitfinex has the funds to make everybody happy including the rats?

What BitFinex should do was to go after the rat and prosecute him for the losses incurred. Not screw their own costumers over this. Now, don't you think this would be the right scenario?

I dont see how Bitfinex would have lost anything. Traders are the one's who lose out because someone was able to basically rig the trading. But as a platform, Bitfinex engine was simply matching trades meaning traders positions were being closed and trades were being made "as normal". Bitfinex would me making %fees from all that. Need to be clear here, their platform was exploited, but Bitfinex did not suffer losses that I can see, only traders. I feel sorry for anyone who was bankrupted by this... so rolling back those trades was the right thing to do for sure. But I think you should probably talk with Bitfinex in private, if you dont get resolution then maybe you can be more vocal, but until then, it would be better not to create noise here.

[Lonechaos]

I dont see how Bitfinex would have lost anything. Traders are the one's who lose out because someone was able to basically rig the trading. But as a platform, Bitfinex engine was simply matching trades meaning traders positions were being closed and trades were being made "as normal". Bitfinex would me making %fees from all that. Need to be clear here, their platform was exploited, but Bitfinex did not suffer losses that I can see, only traders. I feel sorry for anyone who was bankrupted by this... so rolling back those trades was the right thing to do for sure. But I think you should probably talk with Bitfinex in private, if you dont get resolution then maybe you can be more vocal, but until then, it would be better not to create noise here.

People were basically trading with unlimited margins.... imagine playing with $10m with only $100. Who would cover the loss in this case? definitely not the one exploiting the trade

[blueberry]

I dont see how Bitfinex would have lost anything. Traders are the one's who lose out because someone was able to basically rig the trading. But as a platform, Bitfinex engine was simply matching trades meaning traders positions were being closed and trades were being made "as normal". Bitfinex would me making %fees from all that. Need to be clear here, their platform was exploited, but Bitfinex did not suffer losses that I can see, only traders. I feel sorry for anyone who was bankrupted by this... so rolling back those trades was the right thing to do for sure. But I think you should probably talk with Bitfinex in private, if you dont get resolution then maybe you can be more vocal, but until then, it would be better not to create noise here.

Bitfinex would lose out because they would have to cover all the negative balances if trades were not rolled back. Many customers would also be wiped out, being stopped out, margin call etc but in that scenario I am guessing Bitfinex would also have to reimburse these customers or face losing their reputation.

People were basically trading with unlimited margins.... imagine playing with $10m with only $100. Who would cover the loss in this case? definitely not the one exploiting the trade

+1

If we allow the ones who exploited the system (hackers) to withdraw their ill gotten gains, which could be a few hundered thousand dollars worth of coins, then that would be a loss not just to Bitfinex, but to all customers, because it would affect their profit margins and the service they provide to us negatively. The few hundred thousand dollars could be used to hire new staff to improve the security of the site or hire additional customer service staff. Would you rather this money go to the hacker instead? Let's accept this as growing pains, mtgox was attacked in 2011, btc-e in 2012, now Bitfinex in 2014. What doesn't kill you only makes you stronger. Bitfinex will come out this stronger which will benefit everyone in the long run, not only users of the site but the entire Bitcoin community.

[btcdrak]

I dont see how Bitfinex would have lost anything. Traders are the one's who lose out because someone was able to basically rig the trading. But as a platform, Bitfinex engine was simply matching trades meaning traders positions were being closed and trades were being made "as normal". Bitfinex would me making %fees from all that. Need to be clear here, their platform was exploited, but Bitfinex did not suffer losses that I can see, only traders. I feel sorry for anyone who was bankrupted by this... so rolling back those trades was the right thing to do for sure. But I think you should probably talk with Bitfinex in private, if you dont get resolution then maybe you can be more vocal, but until then, it would be better not to create noise here.

Bitfinex would lose out because they would have to cover all the negative balances if trades were not rolled back. Some customers would also lose out but in that scenario I am guessing Bitfinex would also have to reimburse these customers or face losing their reputation.

How much LTC were the attackers able to withdraw in the end?

[blueberry]

I dont see how Bitfinex would have lost anything. Traders are the one's who lose out because someone was able to basically rig the trading. But as a platform, Bitfinex engine was simply matching trades meaning traders positions were being closed and trades were being made "as normal". Bitfinex would me making %fees from all that. Need to be clear here, their platform was exploited, but Bitfinex did not suffer losses that I can see, only traders. I feel sorry for anyone who was bankrupted by this... so rolling back those trades was the right thing to do for sure. But I think you should probably talk with Bitfinex in private, if you dont get resolution then maybe you can be more vocal, but until then, it would be better not to create noise here.

Bitfinex would lose out because they would have to cover all the negative balances if trades were not rolled back. Some customers would also lose out but in that scenario I am guessing Bitfinex would also have to reimburse these customers or face losing their reputation.

How much LTC were the attackers able to withdraw in the end?

Probably not much, if anything. I was talking about a scenario if trades were not rolled back. Many customers accounts got a margin call and ended up in a large negative amount. That would mean that others on the other side of the trade (mainly the exploiters would end up with a hugely positive balance). The positive ill gotten amounts would be withdrawn when withdrawals are re-enabled which as I say could be well in the hundreds of thousands. Bitfinex would have to cover this and reimburse customers who lost or face the wrath of all the customers who lost with ruined repuation.

Here is one account with a negative net value balance of -$131,916.32 and this is just one account:
https://i.imgur.com/LdXwDlM.png

More examples can be found here:
http://www.reddit.com/r/BitcoinMarkets/comments/1x5jpx/psa_bitfinex_bugged_out/
http://www.reddit.com/r/BitcoinMarkets/comments/1x4tt3/possible_bitfinex_bug/

as well as earlier in this thread.

[DavidBAL]

Whats the status on this? I woke up this morning to see I lost 4 btc worth of ltc.. not very pleased to say the least. Trades being rolled back or what?