Hacked bitcoin exchange users lose 36% of deposits

2016-08-08 10:30 - Yuji Nakamura
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Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop. (Rick Bowmer, AP, file)

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Tokyo - Hong Kong-based Bitfinex said all users will lose 36% of their deposits after the bitcoin exchange concluded its review of a $71m hacking attack.

To compensate its customers, Bitfinex said users will receive tokens that may later be redeemed or exchanged for shares in its parent company. Following the announcement, bitcoin climbed to $594 as of 10:55 a.m. on Sunday in Tokyo, based on prices from Coinbase.

The virtual currency dropped 12% to $577.23 in the week through Friday, its largest weekly decline since June, according to Bloomberg prices.

“After much thought, analysis, and consultation, we have arrived at the conclusion that losses must be generalized across all accounts and assets,” the exchange wrote in a blog post on Saturday.

“In place of the loss in each wallet, we are crediting a token labeled BFX to record each customer’s discrete losses.”

Efforts to reach Bitfinex were not immediately successful. A representative of the exchange, verified by Bloomberg, wrote on Reddit that the 36% loss “applies to all assets across the site, so everyone.”

The exchange previously said losses would only apply to users who either had bitcoin deposited at the exchange or who were in the process of lending US dollars for margin trading.

On Tuesday, Bitfinex disclosed that hackers stole 119 756 bitcoin, or about $71 million at current values, from the exchange.

It closed down trading, withdrawals and deposits and said it was cooperating with law enforcement and would update the public after its investigation. In the latest blog post, it said it will reopen with limited functionality in the next day or two.

Bitfinex was the largest exchange for US dollar-denominated transactions over the past month, according to bitcoincharts.com, and the attack at one point sent bitcoin’s price plunging more than 20%.

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