With Socialized Loss Proposal, Bitfinex Enters Uncharted Waters
The Bitfinex hack appears to be forcing the exchange to consider unconventional measures as part of a bid to relaunch after last week's $60m hack. The Hong Kong-based bitcoin exchange announced last night that it is "leaning towards" a scenario that would see it socialize losses among bitcoin users and margin traders with BTC/USD positions. While not "set in stone", the idea that users could potentially share losses equally has nonetheless prompted speculation given the perceived impact the exchange's ultimate closure could have on both the price of bitcoin, and its....
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Hong Kong’s lack of insolvency protection for companies makes a fate similar to MtGox more likely. Creditors, not Bitfinex, are the ones who get to decide whether to socialize losses. Socialized Losses? Not So Fast. Bitfinex, a bitcoin exchange based in Hong Kong, was hacked last week and suffered a loss of roughly $70M USD. The company appears insolvent....
As it tries to mitigate the effects of last week’s theft of nearly $68 million, Hong Kong exchange Bitfinex has announced it may make all Bitcoin traders using its service pay the price. ‘Socialized Loss Scenario’ for Bitcoin Traders. In a blog post today, the exchange said it was “leaning towards” evenly distributing the loss of 119,756 BTC among its....
The Hong Kong-based exchange announced today that it is considering making all of its bitcoin traders pay the price after the theft of $68 million worth of bitcoin, earlier this week. In a Bitfinex blog post it said that the company was expecting to ‘socialize’ the loss among its bitcoin users even those who weren’t originally affected. The blog said: We are still working out the details so nothing is set in stone, however we are leaning towards a socialized loss scenario among bitcoin balances and active loans to BTCUSD positions. The theft of the 119,756 bitcoins means that this is the....
There is a trend emerging in the bitcoin trading landscape. The trend is towards higher and higher leveraged products. If you do not have leverage or zero trade fees at your exchange, then you can expect to see tumbleweed go by every day. Give the users leverage or zero fees, otherwise expect exchange death. Stigma – Socialised Losses and high leverage. There is a chance of Socialized losses when trading at some futures platforms with high leverage. When there are a lot of liquidated positions, the system can be at a loss. To prevent the system from losing money everybody that made a....
Following the July 10 DDOS and CC attacks at OKCoin, the topic of socialized losses and the negative impact they have on trader’s accounts has come to light again. On Friday, OKCoin announced a 55% socialized loss on the futures contract for Litecoin. Last year BitVC suffered losses of 47% — and quite a backlash as a result. Generally these incidents occur because of the massive speed and volatility of the price dump. A “system loss” results, caused by high leverage and low liquidity. It’s important to note liquidations are not market orders. So when the price moves excessively and the....