back to article Broken BitBank Bitfinex shaves 36% from all accounts

Hong Kong cryptocurrency exchange Bitfinex, which last week closed itself down after being hacked, has now told account-holders they'll all have to pay for the mess by surrendering some of their account balance. In a new update for users the outfit says that “After much thought, analysis, and consultation, we have arrived at …

  1. allthecoolshortnamesweretaken

    Well, sharing is caring. Or something.

    1. asdf

      Unless its profits then the peons need to get bent.

  2. MatsSvensson

    Share and enjoy!

    1. TitterYeNot

      "Share and enjoy!"

      Yes, very appropriate.

      Bitfinex to account-holders:- "Have a 36% haircut, oh, and if you don't like it, go stick your head in a pig..."

  3. Tom 64
    Alert

    Ouch

    This is what you get when you keep your gold with everyone else's, in a bunker with a big sign on it that says 'gold stored here'. No matter how good the security, someone is going to try and rob it, and eventually someone succeeds.

  4. MrDamage

    I wonder

    If 36.37% of their client base will jump ship to another exchange because of this move.

    I'm betting they'll be lucky if that percentage represents the amount of customers who stay with them.

    1. Charles 9 Silver badge

      Re: I wonder

      It could've been worse. There were plenty who lost all their assets when Mt. Gox crashed. And this one could've easily just shut all their doors, turned out the lights, and left you with nothing at all. As they say, better 2/3 of something than 100% of nothing...

      1. Sorry that handle is already taken. Silver badge

        Re: I wonder

        I suggest that it is worse because apparently nobody learned from the Magic the Gathering Online Exchange debacle that giving your bitcoins to an unregulated exchange is A Bad Idea.

        1. Charles 9 Silver badge

          Re: I wonder

          In which case it's a lost cause as it's proof people CAN'T learn. Twice stung indicates stinging doesn't make them learn.

      2. Anonymous Coward
        Anonymous Coward

        Re: I wonder

        Charles 9: "There were plenty who lost all their assets when Mt. Gox crashed."

        Indeed. I lost *all* my "Magic: The Gathering" cards when it crashed, including the ultra-rare "dwarf holding massive axe" and "scantily clad female warrior with bikini armour that leaves her midriff totally exposed". (#)

        Bastards.

        (#) Ho ho ho... obviously, I'm only kidding here, I didn't lose any ultra rare cards at all. In fact, approximately 50% of all fantasy images feature a dwarf holding an oversized axe or a bikini warrior, and the cards were only worth £1.39. I bet that asshole put the money towards a Magnum choc ice or something, though.

      3. asdf

        Re: I wonder

        >It could've been worse.

        Or at least if your an American you can keep your money in a bank where it is insured by the government up to a fairly large amount. And before anyone says anything about that being a false sense of security do they really believe if the US government defaults ( as for the value of the dollar, just look how our economy is doing vs the rest of the world) computer crypto money is going to be worth much as well? As the comedian who I can't remember his name said the only currency that will matter in that case will be blow jobs and baloney sandwiches (and probably ammo).

        1. Graham 32

          Re: I wonder

          > the only currency that will matter in that case will be blow jobs and baloney sandwiches

          Sounds like Bill Hicks.

  5. Anonymous Coward
    Anonymous Coward

    In the 'sharing economy' *you* pay when sites get hacked

    "In the 'sharing economy' *you* pay when sites get hacked"

    Scuse me, but who do you think pays when Bad Things happen in ANY part of the economy?

    In the UK (admittedly not the subject of the article) it's largely the punters, often with some collateral damage to the workforce in general, and occasionally with some impact on shareholders.

    Example of the month this week in the UK is the department store chain BHS. A former boss (who denies even being the boss, and blames either his wife or his successor) who represents the modern "unacceptable face of capitalism" has allegedly treated the company as his own personal piggy bank (just as Conrad Black, of Telegraph fame, once did with his media empire, and as others have done and will do).

    Conrad Black was at least charged (in the USA), tried, found guilty, sentenced, and locked up.

    But it was, and is, and probably will be, largely the customers and employees who paid. And in Black's case, the shareholders - it was they who led the prosecution.

    http://www.dailymail.co.uk/news/article-3706064/The-shaming-sir-shifty-Sir-Philip-Green-branded-unacceptable-face-capitalism-furious-MPS-devastating-report-says-plundered-hundreds-millions-doomed-BHS-tax-exile-wife-s-reaping-fortune.html

    1. DavCrav Silver badge

      Re: In the 'sharing economy' *you* pay when sites get hacked

      The weird thing about BHS is everybody talks about the £600m odd that Green took out of it over the course of his ownership, noting how similar it sounds to the pension deficit of about £600m (not any more thanks to Brexit lowering gilt yields) but forget to mention the £600m-odd that Green spent on BHS, in terms of buying it, writing off loans and injections of capital. (He sold BHS for £1 with £64m in cash in its accounts, and over £100m in property, bought BHS for £200m, wrote off £210m in loans, etc.)

  6. Roq D. Kasba

    In God We Trust

    Because every other fucker is out to get us.

    I get it, bitcoin is very clever and has some advantages for transfers and for its grey position as a currency making it harder to track and tax. A lot of people, though, seemed to speculate on the pseudocurrency using irrationality and lack of understanding to pump and dump leaving the tabloid money section investors in the shit. I'm wondering how many of the existing accounts and value is held by the same speculators, how much by money launderers, and how much by cyberextortion ransomware companies, how much by darknet child pornographers and addictive substance suppliers, and how much by the average Joe holding a few to pay for essential groceries.

    My hunch is that almost everyone affected is someone I don't care was affected, and may they suffer their losses with good grace.

    1. Phil W

      Re: In God We Trust

      "Because every other fucker is out to get us."

      Nah, He's out to get you as well. But there's nothing you can do about that.

      1. Anonymous Coward
        Anonymous Coward

        Re: In God We Trust

        >Nah, He's out to get you as well.

        Especially if you live in Africa. He sure hates that continent.

  7. M7S

    The danger of investing in an unregulated currency (or other "thing")

    is that you're investing in an unregulated currency (or other "thing").

    It disappoints me that the principles of financial education are, for whatever reason, apparently not widely understood.

  8. Anonymous Coward
    Anonymous Coward

    Welcome to...

    .....Cyprus?

  9. frank ly

    fork it

    The last time there was a cyber-heist on a crypto-currency outfit, they recovered the situation by doing a 'hard fork' of the blockchain. I'm sure I read that in The Register. Can't they do this here?

    1. Sorry that handle is already taken. Silver badge

      Re: fork it

      That was Ethereum, and it just led to more problems because the people who set the whole thing up (who didn't know what they were doing) and then the "DAO" which got hacked (because they didn't know what they were doing) bungled the hard fork so badly that it needs another fork to fix (...because they didn't know what they were doing). Also, the hack was a direct result of the protocol, this one is the result of poor third party security.

      But the whole point of pseudonymous, decentralised cryptocurrencies is that there is no central authority or control. Whether or not it could be achieved, forking the bitcoin blockchain to reverse this hack goes against the core principle of the system.

      And that's (one of many reasons) why bitcoin (and its descendants) is such a ridiculous idea.

      On top of that, bitcoin's developers haven't even been able to agree on how to deal with congestion. Half of the devs want to simply increase the block size, which you'd think was the sensible solution. The other half want to preserve the congestion so that the company they work for can introduce some vapourware at some unspecified time in the future that they promise will solve the problem. Then there are the (primarily Chinese) miners who don't want it increased too far lest their internet connections fail to keep up, costing them money. And they're all behaving like insane children.

  10. Anonymous Coward
    Anonymous Coward

    Quantitative Easing effectively has the same effect. The government/bank prints money to increase the amount in circulation. People use that money to invest in inflating house prices. Prudent savers suddenly find their life-savings are depreciating to pay for it.

    I never did understand why the solution to a financial crash caused by too many over-geared borrowers - was to make it even cheaper to get new loans.

    1. Sorry that handle is already taken. Silver badge

      In recent times, and notwithstanding all of the other issues, inflation didn't budge when QE was conducted, suggesting that it in fact helped to avoid deflation. Everyone's debts increasing all at the same time probably would have been a bad situation...

      How an economy gets into such a parlous state in the first place is another matter.

      1. Anonymous Coward
        Anonymous Coward

        One reason for the inflation figure not moving after QE might be that there is something missing from the inflation measure used. So we look a little closer and, lo and behold, it doesn't include property prices ( apart from "imputed rents" which is a fabricated value with no connection to reality ).

        Essentially QE has inflated asset prices, essentially transferring wealth from the majority to the minority, while exposing the BoE to potentially huge losses when it eventually has to unwind its position (which liability will,of course, be covered by the taxpayer). In addition, one effect of QE pushing up bond prices and hence forcing down interest rates is to force companies with final salary pension schemes* to put additional money into those schemes that would otherwise have been available for investment - one estimate I saw was this effect would total about 70 billion pounds.

        * ( although these schemes are now rare outside of the BoE, there are plenty that were closed to new employees years ago but will have ongoing liabilities for many years yet )

        Oh, and the recent 0.25% rate cut comes after the fall in Sterling which, according to the BoE's own "rule of thumb" will have an effect roughly equivalent to a rate cut of 2.0% .

  11. razorfishsl

    Er sorry........ Bitcoin is NOT unregulated in Hong Kong, if this site was following the law and correctly registered then the users have protection.

  12. amanfromMars 1 Silver badge

    In Global Operating Devices We Trust .....

    “After much thought, analysis, and consultation, we have arrived at the conclusion that losses must be generalized across all accounts and assets.”

    It would be a titanic folly for the likes of a real virtualised economy/dodgy fiat currency banking sector to think to trial such a shenanigan to try save themselves from catastrophic losses and escaping information around intelligence used for mass control, for the consequences will be dire death and concentrated targeted destruction against chief president/CEO heads.

    Indeed, whenever one considers the current regime which privatises profits and socialises losses, it is surely probably already a long overdue correction to be fully expected in the near future and long term.

    With so many crazies out there doing their mad thing in so many places right around the globe, all it would take is a little remote control guidance to turn the smarter renegade rogue outfit[s] into super hero brigade[s].

    And one imagines that such would be a valid virile viral exercise to entertain both manic manipulating muppets and sociopathic sock puppets alike …… http://www.zerohedge.com/news/2016-08-07/alert-conspiracy-theorists-youre-being-lied>……

    The US military is developing software that will let it secretly manipulate social media sites by using fake online personas to influence internet conversations and spread pro-American propaganda. A Californian corporation has been awarded a contract with United States Central Command (Centcom), which oversees US armed operations in the Middle East and Central Asia, to develop what is described as an "online persona management service" that will allow one US serviceman or woman to control up to 10 separate identities based all over the world. The project has been likened by web experts to China's attempts to control and restrict free speech on the internet. Critics are likely to complain that it will allow the US military to create a false consensus in online conversations, crowd out unwelcome opinions and smother commentaries or reports that do not correspond with its own objectives. The discovery that the US military is developing false online personalities – known to users of social media as "sock puppets" – could also encourage other governments, private companies and non-government organisations to do the same. The Centcom contract stipulates that each fake online persona must have a convincing background, history and supporting details, and that up to 50 US-based controllers should be able to operate false identities from their workstations "without fear of being discovered by sophisticated adversaries". Centcom spokesman Commander Bill Speaks said: "The technology supports classified blogging activities on foreign-language websites to enable Centcom to counter violent extremist and enemy propaganda outside the US.”

    1. Anonymous Coward
      Anonymous Coward

      Re: that quote 'from Zerohedge'

      That quote 'from Zerohedge' in a 2016 article was first published five years ago in the Guardian:

      https://www.theguardian.com/technology/2011/mar/17/us-spy-operation-social-networks

      Obviously that was before it turned into the New Guardian (same relationship as between Labour and New Labour). No more Scott Trust in charge so the Guardian can maintain its standards without worrying about editorial independence, it's now Scott Trust Ltd [1], facts are no longer sacred, they're frequently just inconvenient when there's a pro-corporate line to be followed.

      More recently still the New Guardian has turned into yet another outlet for "drivel as news", in particular recently from the unelectable AnyoneButCorbyn faction.

      Meanwhile the red ink on the balance sheet gets bigger as the readership (especially paying readership) gets smaller and smaller. Can't imagine why.

      It's a pleasant surprise to find that one of the two authors of the 2011 article (Ian Cobain) still works at the Guardian. The clock is ticking though.

      [1] https://beta.companieshouse.gov.uk/company/06706464/officers

  13. Aodhhan

    Come on, this is almost comedic

    The Hillary Clinton business model.

    Have poor information security and blame it on the hackers. Then tax the heck out of everyone to pay for her salary and the 'problem'.

    It works, because there are a lot of suckers and idiots.

    1. Anonymous Coward
      Anonymous Coward

      Re: Come on, this is almost comedic

      As opposed to the Trump business model which is only about selling a five letter word and nothing else and periodic strategic bankruptcies when things go sideways due to incompetence.

  14. Anonymous Coward
    Anonymous Coward

    What if they weren't actually hacked?

    The site owners could simply be stealing the money and faked a hack attack to allow them to get away with it. Spreading the loss around is just subterfuge to keep the ones who were "hacked" happy by giving them something. It also justifies evidence showing that Bitfinex is going into every individual account to add/remove something - to add noise to those trying to track down the source of the "hack". By the time people figured out it wasn't a hack, the site will be shut down and the owners (who have likely planned this from the beginning and operated under fake names) long gone with the loot.

    There's nothing preventing the same thing being done at other bitcoin "banks", which rather belies calling them that.

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