Bitfinex, the popular online bitcoin storage exchange has told its users that they will all lose 36% of their assets following a cyber-attack.
The exchange, based in Hong Kong, said it had lost up to $65m following the successful cyber-attack that occurred last week. News of the hack, and the subsequent theft of bitcoin caused the overall price of Bitcoin to drop about 20%, and despite rallying and rebounding it still hasn’t fully recovered to pre-hack levels.
Bitfinex stated that a total of 119,756 bitcoins were taken by hackers in the attack. But it’s not the first time this has happened to the bitcoin exchange. Back in May of last year, around 1500 bitcoins were stolen in a similar online break in.
Following last week’s hack of Bitfinex, the exchange closed down trading, withdrawals and deposits thereby frustrating hundreds, if not thousands, of bitcoin users.
Bitfinex’s answer to the hack has been to spread the cost of the exchanges losses across all bitcoin accounts within the exchange:
“After much thought, analysis, and consultation, we have arrived at the conclusion that losses must be generalized across all accounts and assets. This is the closest approximation to what would happen in a liquidation context. Upon logging into the platform, customers will see that they have experienced a generalized loss percentage of 36.067%. “
However, there’s still a chance that affected bitcoin clients will be compensated for their 36% loss, in the long term, at least:
The company said it has given all affected clients a “BFX” token crediting them for their losses that can eventually be redeemed by the exchange or for shares in iFinex, the exchange’s parent company.
“We are actively discussing various strategic options with numerous potential investors as part of our strategy to fully compensate our customers. Such discussions, however, are in early stages and will likely take time to play out. “
The value of bitcoin has surged in recent months thanks to the rapid adoption by Chinese users who have flocked to the virtual currency, using the cryptocurrency to bypass stringent Chinese capital controls.