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 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 They will not be able to use Clef and all API keys have been revoked.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."
BCDR buyer's guide for MSPs
How to choose a business continuity and disaster recovery solutionDownload now
The definitive guide to IT security
Protecting your MSP and your customersDownload now
Cost of a data breach report 2020
Find out what factors help mitigate breach costsDownload now
The complete guide to changing your phone system provider
Optimise your phone system for better business resultsDownload now