Bitfinex Reimburses Hacked Customers in Full

Apr 05, 2017 at 12:07 // News
Author
Maxim Price

Bitfinex has announced that it has finally redeemed 100% of all issued and outstanding BFX tokens.

Bitfinex has announced that it has redeemed all of the BFX tokens issued after the crippling hack last summer that removed almost 120.000 Bitcoins from customer’s wallets. 

In August 2016, the Hong Kong based exchange was hit by a massive hack, stripping customer’s accounts of 119,756 Bitcoins, or around 70 million dollars. The attack on the leading Bitcoin exchange shook the whole market, with Bitcoin prices dropping within hours. The exchange decided to distribute losses among all users, with a general loss percentage of 36%. BFX tokens were created after the hack, with an obligation to return the 36% of lost funds to all customers. 

“Bitfinex is pleased to announce that we will shortly be redeeming 100% of all currently issued and outstanding BFX tokens. This will be the final redemption of BFX tokens created in August 2016. After these redemptions, no BFX tokens will remain outstanding; they will all be destroyed,” the exchange announced on the official blog

The tokens were bought back by Bitfinex at a price of 1USD, in a process that took around 45 minutes. The exchange had previously bought back only a little over one percent of tokens back in September 2016. 

CoinIdol has reached out to Tone Vays from LibertyLifeTrail, who commends Bitfinex’s efforts to reimburse the customers. 

"Bitfinex being able to repay the hacked funds simply shows that the C-Level management is responsible with their moral judgments unlike most companies in crypto that would have ran away with the other half of the funds. It also proves how hard Bitcoin security actually is and your Bitcoin at Bitfinex or a similar exchange remain at risk of a hack."

Tone Vays

“I would also like to point out that Phil Potter (CEO of Bitfinex) has a Wall Street background unlike Paul ‘Big Vern’ Vernon of Cryptsy, or Mark Karpelès of MT Gox, or Trendon Shavers of Bitcoin Savings and Trust, or Josh Garza of Paycoin and so on,” added Tone of LibertyLifeTrail.

In March 2017, Bitfinex publicly thanked their customers and investors for making them the only billion dollar crypto currency exchange in the world, and has now further explained the circumstances that enabled them to reimburse customers. 

“A combination of factors has led to this seminal moment for Bitfinex, including a dramatic uptick in equity conversions; record operating results in March; and, the decision to reduce our reserves in favor of this opportunity. Once again, we are deeply grateful for the patience and trust of our customers and shareholders as we worked towards—and have achieved—full recovery in just eight months. Without the community’s support, Bitfinex could have easily become a footnote in the history of the digital token revolution, instead of a leader and trend-setter. Thank you. By the end of this week, we will be sending notes directly to our shareholders with more information about what to expect in the coming months.” 

The hackers have not been identified to this day, and Bitfinex has previously stated that it is collaborating with the authorities and trying to determine how exactly the security protocols had been bypassed. 

The Bitfinex hack was the second largest breach of a Bitcoin exchange in history. It is surpassed only by the MT Gox hack of 2014, when over 850.000 BTC were stolen from the Japanese exchange, at a value of 460 million USD.

Simon Dixon, CEO of BnkToTheFuture.com, explains to CoinIdol that this is financial innovation’s triumph over traditional liquidation proceedings. Simon Dixon, CEO BnkToTheFuture.com said:

"When Mt. Gox had client funds stolen, no customer received any funds back. However, plenty of lawyers, accountants, auditors and court officials were paid as they chose to follow traditional liquidation proceedings. Bitfinex handled their crisis differently. They used financial innovation as an alternative to traditional liquidation proceedings. At BnkToTheFuture.com we wanted to do our part to help investors that believed in the recovery of BitFinex, by putting together a compliant way for victims of the theft to convert the debt tokens Bitfinex issued them into equity. We were very pleased to have helped facilitate over $55m of investment into Bitfinex this way. This market solution led to the complete recovery of the exchange and we believe was very good for the Bitcoin sector, Bitfinex customers and now over 370 investors. I believe this is the story of how financial innovation outperformed traditional liquidation proceedings by an order of magnitude.” 

Simon Dixon, CEO of BnkToTheFuture.com