IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

Bitcoin users will lose 36% of assets after hack

Bitcoin dealing platform Hong Kong-based Bitfinex said it will give customers a BFX token equal to their losses instead

Bitcoin sitting on edge on a table with several other coins in the background

Bitcoin trading platform Bitfinex has revealed its users will lose 36 per cent of their assets after a digital currency hack meant its customers would need to share the losses.

However, the company is willing to issue a BFX token equal to their losses, which could either be exchanged for repayment or shares in its parent company iFinex.

"Please take this time to log in and review your account and balances, taking note of the adjustments caused by the closing of open margin positions and the application of the Extraordinary Loss Adjustment," Bitfinex wrote in a blog post.

"The loss adjustment is represented by your balance in "BFX" tokens which are priced at 1.00 USD until we are able to allow trading of that token, likely within the next week. The trading of BFX tokens may be restricted for US customers."

Although the platform was taken down while it attempted to fix the damage and work out how much had been lost, it will be coming back online in a "controlled and secure way."

The company re-launched on a read-only basis, although those who wish to access their accounts must reset their passwords and 2 factor authentication. They will not be able to use Clef and all API keys have been revoked.

"Full platform functionality will come online in progressive steps in the coming days," the blog continued. "Withdrawing, depositing and exchange trading will come online first, with margin trading (for non-US customers) to resume sometime after that. Further announcements will be made when the schedule for turning on those features is finalized."

03/08/2016: Bitcoin hack wipes a fifth of value from digital currency

Bitcoin investors' nerves have been tested once again, as a major bitcoin exchange revealed hackers had swiped 119,756 bitcoins, crashing the value of the digital currency crashing by a fifth. 

The stolen bitcoin were worth $65 million (49 million) - although the instability means they have also lost some of their value. The attack knocked the price of a single bitcoin from $604 to $482 - its lowest in two months - although the cryptocurrency recovered to $544 as of yesterday and was hovering at about the value same at the time of publishing. 

Bitfinex, based in Hong Kong, is one of the largest bitcoin exchanges, and the largest outside mainland China. Director of community and product development Zane Tackett was quoted in the Wall Street Journal as saying the company knows "exactly how relevant systems were compromised," but did not reveal further details.

The company said its main website would remain offline and all trading halted until the investigation was over. Only bitcoin was affected; other currencies the company traded were not targeted. 

The hack was compared to an attack in 2014 against Mt. Gox, which lost 850,000 bitcoin. That exchange never reopened, but experts agreed the Bitfinex incident was likely to be less damaging. "This will hurt confidence but people already using bitcoin are still trading," Arthur Hayes, founder of Hong Kong-based BitMEX, told the Financial Times.

Trader Jacob Eliosoff told Coindesk that the longer-term impact of the hack could depend on how Bitfinex "will make customers whole". The company said in a blog post it would "look at various options to address customer losses later in the investigation."

Featured Resources

Join the 90% of enterprises accelerating to the cloud

Business transformation through digital modernisation

Free Download

Delivering on demand: Momentum builds toward flexible IT

A modern digital workplace strategy

Free download

Modernise the workforce experience

Actionable insights and an optimised experience for both IT and end users

Free Download

The digital workplace roadmap

A leader's guide to strategy and success

Free Download

Recommended

What is cryptocurrency mining?
cryptocurrencies

What is cryptocurrency mining?

27 May 2022
IMF urges El Salvador to remove Bitcoin as legal tender
cryptocurrencies

IMF urges El Salvador to remove Bitcoin as legal tender

26 Jan 2022
El Salvador announces plans to build a 'Bitcoin city' at the foot of a volcano
cryptocurrencies

El Salvador announces plans to build a 'Bitcoin city' at the foot of a volcano

22 Nov 2021
Cryptocurrency: Should you invest?
cryptocurrencies

Cryptocurrency: Should you invest?

27 Oct 2021

Most Popular

Actively exploited server backdoor remains undetected in most organisations' networks
cyber attacks

Actively exploited server backdoor remains undetected in most organisations' networks

1 Jul 2022
Former Uber security chief to face fraud charges over hack coverup
data breaches

Former Uber security chief to face fraud charges over hack coverup

29 Jun 2022
Why India wants to become a chipmaking powerhouse
components

Why India wants to become a chipmaking powerhouse

28 Jun 2022