Bitfinex uses company equity to compensate customers for losses

Rage Comment : At the beginning of the month, the digital currency exchange Bitfinex was hacked, resulting in customer fund losses. The exchange then decided to let customers share the losses and issued BFX as a debt blockchain asset. This move has attracted many questions, but the exchange has signed a letter of intent with the British investment platform BnkToTheFuture to cooperate in the implementation of the plan. Soon, the exchange's customers will be able to convert the amount of their losses into equity in Bitfinex's parent company iFinex Inc. However, it is not yet known whether this compensation method is the best for customers.

Translation: Annie_Xu

The Bitfinex exchange has decided to socialize the losses caused by the hacker by converting them into company equity; this means that soon the exchange’s customers will be able to redeem digital assets issued by the exchange.

A few weeks after the exchange was hacked, it signed a letter of intent with British investment platform BnkToTheFuture, which will see the companies collaborating to compensate the exchange’s customers for lost BFX tokens using equity in iFinex Inc (Bitfinex’s parent company in the British Virgin Islands).

After the exchange was relaunched on August 11, it issued BFX tokens to compensate 36% of customer losses. However, the issue price of BFX, which was $1, has now dropped to $0.38.

Bitfinex CEO Jean Louis van der Velde stated that the company will continue to disclose the latest developments of the hacker attack and disclose the company's financial status before converting BFX tokens into equity.

While the announcement brings Bitfinex’s plans forward, the move remains controversial due to the unclear legality of the move.

Supporters of the system say it is better for customers than outright bankruptcy, as happened with the collapse of Japan's Mt Gox exchange, where most customers are still waiting for compensation for their losses two years ago.

Critics argue this could lead to regulatory intervention and warn that exchanges could face legal action if customers take formal action.

But the exchange is also unsure what impact the letter of intent will have.

Zane Tackett

Bitfinex Community Director Zane Tackett said:

"The next step is to continue discussions with BnkToTheFuture and work hard to put this plan into action."