Bitcoin Bail-Ins and Yuan Bets

Bitcoin bail-in.

Bitfinex is a bitcoin exchange that suffered a $71 million hacking attack. It is not, to put it gently, the first bitcoin exchange to get hacked. Historically, the way bitcoin-exchange hacks work is that the exchange keeps all of its customers’ bitcoins in a single commingled bitcoin wallet, the hackers steal bitcoins from the wallet, and the exchange then passes those losses on to its customers with a mumbled apology. Bitfinex, however, had a separate bitcoin wallet for each customer. (“The era of commingling customer bitcoin and all of the associated security exposures is over,” it said, in happier times.) So when hackers stole about 36 percent of the bitcoins at Bitfinex, they didn’t just steal 36 percent of each customer’s bitcoins: They stole, basically, all of the bitcoins owned by 36 percent of the customers, and none of the bitcoins held by 64 percent of the customers. (Weighting customers by account size; you know what I mean.)

But Bitfinex decided to socialize the losses:

Due to the indiscriminate nature of the attack, we have decided to generalize losses across all accounts. Upon logging into the platform, customers will see that they have experienced a generalized loss percentage of 36.067%. In a later

Read more ... source: TheBitcoinNews

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