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FinanceBitcoin

Hacked Bitcoin Exchange Considers Splitting Its $72 Million Loss Among All Users

Lucinda Shen
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Lucinda Shen
Lucinda Shen
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Lucinda Shen
By
Lucinda Shen
Lucinda Shen
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August 5, 2016, 11:14 AM ET
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SALT LAKE CITY, UT - APRIL 26: A pile of Bitcoins are shown here after Software engineer Mike Caldwell minted them in his shop on April 26, 2013 in Sandy, Utah. Bitcoin is an experimental digital currency used over the Internet that is gaining in popularity worldwide. (Photo by George Frey/Getty Images)Photograph by George Frey/Getty Images

Digital currency exchange Bitfinex says it’s leaning toward spreading $72 million loss from a hack earlier this week among users.

“We are still working out the details so nothing is set in stone, however we are leaning towards a socialized loss scenario among bitcoin balances and active loans to Bitcoin/U.S. Dollar positions,” the company wrote in a Friday blog post.

On Tuesday, the Hong Kong-based exchange suspended trading after discovering the breach. Some users had their bitcoins stolen, totaling 119,756 bitcoins and 0.075% of all bitcoins in circulation.

“Some users who were not hacked will feel angry at having to stump up their funds to cover shortfalls elsewhere on the exchange. Whether it’s the right decision or not—time will tell,” Charles Hayter, CEO of CryptoCompare told CNBC. “Other exchanges have funded the losses off their own book—but then the losses weren’t so extreme.”

The losses also represent anywhere from 10% to 30% of Bitfinex’s capital holdings.

Over the past few days, the company has been going though the process of “restoring limited functionality” to the exchange and settling accounts based on an exchange rate of $604.06—the midpoint of the bid and ask on Aug. 2 at 6 p.m. UTC.

Bitfinex said it would give more details alongside an FAQ tomorrow to help answer the expected flood of questions it has been receiving.

About the Author
Lucinda Shen
By Lucinda Shen
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