
Hacked Bitcoin firm plans to spread losses across all users - uptown
http://www.cnbc.com/2016/08/05/hacked-bitcoin-firm-plans-to-spread-losses-across-all-users.html
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chollida1
So maybe I'm just jaded and I've worked through enough bankruptcy filings in
my life but the first thing that would come to mind is who exactly is going to
do the auditing and hair cut?

Is it the exchange or is it a licensed bankruptcy trustee like www.pwc.com?

If things are above board then it almost by definition will be the later. If
on the other hand its the exchange doing the haircut then you have to trust
that they'll be honest about it....I mean with millions involved that's alot
of trust.

I hope the exchanges assets are sold off first to help pay off the missing
bitcoins because if the exchange is trying to force the loss onto its
depositors and then keep running as a business then that's some really scummy
behavior.

I'd assume the model would be Lehman brothers, force it into bankruptcy
liquidate its assets, wipe out the owners so they don't benefit from their own
mistakes and use the remaining funds to pay back creditors/depositors.

~~~
TwoFactor
They don't appear to be using official auditors, and have not mentioned
bankruptcy as one of their current options.

The current speculation is that they will continue operating, and issue coins
that either represents equity or debt in the company to compensate customers.

~~~
vec
I can't help but enjoy a little schadenfreude here. It sucks that largely
innocent investors are going to get shafted, but if you create an entire
alternate currency ecosystem specifically to escape regulation, central
control, and third-party involvement in trades, you can't really be surprised
if, when something eventually and inevitably goes wrong, there's no
regulations, no central authority to appeal to, and no third party who can
help untangle it.

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smoyer
I'm not sure why this company believes they deserve to stay in business.
They've proven they're not good at security to a percentage of their customers
and might be about to cause a lot of bad will with the rest of their
customers.

More importantly, if I'm an unaffected customer and can swallow the "haircut",
how do I know they won't be hacked again?

EDIT: As a customer getting a forced haircut, I would also expect the company
itself to get an appropriate haircut.

~~~
hashkb
I don't think companies base their decisions on what they think they deserve.
That's not rational... they're making decisions based on opportunity for
profit.

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uptown
I fail to see how this would be anything other than theft if Bitfinex goes
forward with this. Unless their terms of service have them setup as some form
of co-op, I'd think they'll see a rush to the exits in the near-term, and be
sued into oblivion on the long-term.

~~~
spriggan3
> I fail to see how this would be anything other than theft if Bitfinex goes
> forward with this.

This is theft, plain and simple. They lost some money now they are taxing
their customers and making pay for their mistakes. It doesn't matter where the
stolen money went, it's not up to the customers to bail them out.

~~~
strathmeyer
No that's how a bank works, but not bitcoin.

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solidgumby
This sounds familiar. Exactly like neo-liberalism. Privatizing profits while
communizing loss.

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010a
Oh yeah, I think I remember the FDIC doing something similar to this.

~~~
Jtsummers
?? Can't tell if serious.

The FDIC only insures accounts to a certain amount. So, yeah, I suppose they
kinda do this. But it's a known risk and the reason that you, as a consumer,
don't keep values beyond the FDIC insured limits in any one bank.

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koolba
So why wouldn't anybody who's not an idiot immediately withdraw all their BTC
from these guys so that they can keep 100% of what's left?

~~~
Svenskunganka
> Bitfinex revealed it had been hacked on Tuesday and _suspended trading_

That probably includes transferring to another BitCoin wallet.

~~~
koolba
I didn't say trading, I said withdrawal. Are they suspending that as well?
(the article does not say)

~~~
Svenskunganka
Their website says:

> ... While we are halting all operations at this time ...

and:

> The first step is bringing the site online and allowing users to login and
> view the state of their accounts. Note that initially trading, deposits,
> withdrawals, and other core site functionality will be disabled.

------
fagnerbrack
I recently met a kid that lost 1 million dollars worth of bitcoins. He built a
site and all money was hacked and stolen from the database when he was 14.

~~~
abstractbeliefs
1 million dollars at what time, the time he had it?

At one point I was offered 25BTC for a weekend project. At the time, that was
worth ~$20. I didn't take it.

I don't regret it either, it was a sound decision at the time, so I contend I
only lost twenty bucks, not $25k.

~~~
cableshaft
Wish I had done more stuff like that when I was younger. I did get some
bitcoin back before it was worth anything, but not nearly as much as I could
have if I was serious about it.

But of course back then most people didn't know what the potential ceiling was
going to be on them. $30 a coin was a ridiculously high price we might never
see again at the time. I remember when it crashed after that and went down to
~$7 a coin and trying to get a few through some website, but having trouble
getting the transaction to go through and giving up on it.

And I still remember when they were worth like 4 cents per coin, but it was
almost impossible to get them since there wasn't a good way to buy them except
from other people who had them, although it was possible to mine them from
your computer back then.

~~~
HillRat
Really, though, that's like saying you wished you had bought Beanie Babies,
MtG cards, or even tulips before the Dutch mania. Bitcoin isn't an investment
vehicle, it's a cypherpunk Pog, and its value is completely dependent on the
behavior of other collectors. There was no logical reason to believe btc would
get within an order of magnitude of its current value, and no reason to think
it'll be there ten years from now, absent some institutional shift to its use
beyond treating it as a curiosity (which would require a degree of liquidity
that I don't believe currently exists).

Some people got very lucky -- which is great! But don't lament that you didn't
do something that, at the time and without the benefit of hindsight, wasn't
really rational.

~~~
cableshaft
It was a little different with Bitcoin. There was a time where it was a very
passive thing.

You leave the computer on and you mined bitcoins (whole blocks, not just a
fraction of a fraction of a reward from a mining group). I left the bitcoin
software on for a single week back then. I could have left it on for a few
months and mined like 1000+ bitcoins, but I only left it on for a week. I was
excited about it too, and thought this could be the future of money, but even
back then it didn't occur to me that the price of them would ever shoot up
like that. So after a week I got bored and was like "I'll check it out again
in a year or so once more people are into it."

You had to actively buy Beanie Babies (or request them as gifts), and
sometimes wait in ridiculous lines for hours, etc. A closer analogy would be
if someone sent you brand new Beanie Babies for free every week, as long as
you said you wanted them.

Granted, you could have taken more active measures to acquire Bitcoin even
back then (like that 10,000 bitcoin pizza, for example), but it doesn't
require the amount of headspace that something like Beanie Babies would
(hunting down the uniques, knowing how much each one is worth, etc). I never
got into selling Magic:The Gathering cards even though I played the game for
the same reason.

I'm not actually beating myself up about it, I'm just realizing the trajectory
of my life would have gone a lot differently if only I let that software keep
running several years ago.

