Summary of Events

Since August 2, when a hacker attack diverts 120000 bitcoin in Bitfinex, many people have wondered what to do to try to recover the losses suffered by the incident. Many investors used the swap services, leverage and trading in the Bitfinex platform, including several cases with significant amounts deposited in brokerage in Hong Kong. The Bitfinex released an update of research on the causes that allowed the theft of 36% of all bitcoins in custody of the company. The Ledger Labs, forensic technology startup specializing in blockchain, is analyzing the broker's systems to determine exactly how the security breach occurred, and to propose improvements to the platform security design.

However, to date, has not yet released more details about the incident and speculation in the discussion forums follow heated. As everyone should know already, the Bitfinex confiscated 36% of the balance of all customers to cover the losses resulting from the attack, causing potential loss of US $ 72 million.

The solution found by the direction of Bitfinex to keep the business alive was to offer in exchange for these 36%, a debt issued in the form of tokens, entitled BFX, which correspond to brokerage shares. The tokens were issued with an initial price of US $ 1 per unit. Last week the BFX started trading in the market, ranging from minimum of $ 0.25 and reaching about $ 0.44 in recent days.

In practice, this is the first time in history that a company makes a forced debt issuance using blockchain. The tokenization of financial assets, a great merit of blockchain technology allowed the Bitfinex propose this alternative and let market participants decide if they want to hold or trade the title of debt, constituting a kind of opening forced capital, with clients such as shareholders.

The proposal of Bitfinex

All guests have 36% of your balance converted into the form of BFX. The customer is the company's promise to recover these resources, or part of them, at some point not determined, from the operating profit of the brokerage. So in the best case, victims can recover all their money. In the worst case, the victims lose 36% and stay with tokens of no value, making the total loss of confiscated resources.

Both the best and the worst of scenarios seem happier outcomes that lead to discussion for justice and stay with absolutely nothing until a decision is taken, while the costs of the legal process accumulate.

However absurd it may seem initially this proposal, given the history of the bitcoin market, this may be the best alternative, especially for the small investor. Just look at the progress of the case of the largest theft of bitcoins history, which involved the Japanese brokerage Mt. Gox in 2013. No one has been able to receive a penny of the $ 480 million that disappeared in the case of Mt. Gox.

The regulatory weakness related to bitcoin( @cryptoeasy/the-regulation-debate-that-leaves-bitcoin-in-child-development-to-adult-stage-something-that-you-must-see)  innovations makes legal disputes are a good deal only for lawyers who accumulate fees as legal bureaucracy tries to understand and create jurisprudence.

The Bitfinex had alternatively declare bankruptcy and let the authorities decide what would be the compensation process for customers and what the responsibility of the broker partners. The bankruptcy filing likely would lead to the blocking of all funds deposited on the platform, leaving them unable to access users even 64% of bitcoins not affected by the attack.

By choosing BFX solution, the majority of customers came to negotiate the balance and remove the so intensely features that put Bitfinex back in the lead among the most actively traded pair BTC / USD, just two weeks after a hacker attack of this magnitude.

The proposal Bitfinex is totally unusual and, if it works, can profoundly influence how new conflicts can be solved in the future. No doubt the experience will bring important learnings for all ecosystem related to bitcoin and blockchain.

So if you lost money in Bitfinex and assess your alternatives and consider negotiating your BFX's to mitigate some of its losses. Judicialize the case may cost you dearly and do you end up with nothing.