Published On: Sat, Aug 6th, 2016

Bitcoin Exchange Hacked & Passing the Losses onto Customers

Susanne.Posel-Headline.News.Official- bitcoin.stolen.ponzi.scheme_occupycorporatismSusanne Posel ,Chief Editor Occupy Corporatism | Media Spokesperson, HEALTH MAX Group

Bitfinex, based out of Hong Kong, is still reeling after a devastating hack, but now the company wants to pass the losses onto the customers.

In a blog post, Bitfinex explained : “We are leaning towards a socialized loss scenario among bitcoin balances and active loans to BTCUSD positions. [Bitfinex is still] settling positions and balances, [and will provide more details soon].”

As far as US dollar exchanges go, Bitfinex was the biggest prior to the hack that sent the company plunging more than 20% on the market. The hackers made off with 119,756 in bitcoins (or $68 million).

On Reddit, Bitfinex said : “Users who either had bitcoin deposited at the exchange or who were in the process of lending U.S. dollars for margin trading would be affected.”

The most disturbing part of this is the Raphael Nicolle, founder and CEO of Bitfinex, has been known to invest in Ponzi schemes; such as in 2012 while in France, Nicolle filled his bitcoin orders by asking “everyone that previously ‘registered’ with me to lend me some [bitcoin].”

By promising to return the bitcoins after a week with 2% interest added on, Nicolle decided to “do arbitrage – I buy low and sell high.”

Journalist Izabella Kaminsaka questioned legalities in Bitfinex’s predicament, such as squatter’s rights when it comes to bitcoins with respect to a “market ouvert rule”.

Kaminsaka explained that while Bitfinex plans to victimize their customers, they “are still going to be entitled to track the funds across the blockchain to seek recourse from whomsoever receives the bitcoins in their accounts.”

In fact, Kaminsaka points out: “Just one successful claim by a victim who tracks his funds to an identifiable third party, and the precedent is set. Any exchanges dealing with bitcoin in a legitimate capacity would from then on be inclined to do much stronger due diligence on whether the bitcoins being deposited in their system were connected to ill-gotten gains. This in turn would open the door to the black-listing of funds that can not prove they were originated honestly via legitimate earnings.”