Hacked bitcoin exchange says it will spread losses among users

Hong Kong-based bitcoin exchange Bitfinex is still settling positions and balances, and will provide more details soon

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After suffering a crippling hack earlier this week, Hong Kong-based bitcoin exchange Bitfinex said it may spread the loss among its users, including ones not directly impacted by the hack.

"We are leaning towards a socialised loss scenario among bitcoin balances and active loans to BTCUSD positions," the exchange wrote in a blog post Friday. Bitfinex is still "settling positions and balances," and will provide more details soon, it said.

Efforts to contact Bitfinex were not immediately successful. A representative of the exchange, verified by Bloomberg, wrote on Reddit that users who either had bitcoin deposited at the exchange or who were in the process of lending US dollars for margin trading would be affected.

"This might be a controversial plan in the short-term," said Chandler Guo, an investor in digital currency startups, who had about 100 bitcoins in Bitfenix. "A lot of people won't be willing to share the loss, but long-term wise if the platform can return the losses to people then it will be ok."

On Tuesday, Bitfinex disclosed that hackers stole 119,756 bitcoin, or about $68 million at current values, from the exchange. It closed down trading, withdrawals and deposits and said it was cooperating with law enforcement and would update the public after its investigation. The attack sent bitcoin's price plunging more than 20 per cent, before the virtual currency recovered some of its losses. Bitcoin traded at $572 per dollar as of 3:24 pm in Tokyo, down 13 per cent for the week.

Bitfinex was the largest exchange for US dollar-denominated transactions over the past month, according to bitcoincharts.com. This week's attack is potentially the second-largest on an exchange since Japan's Mt. Gox - then the largest bitcoin exchange in the world - suffered a hack in February 2014 and filed for bankruptcy weeks later. Bitcoin prices plunged 30 per cent that month.