Bitfinex Catches Manipulators in Bitcoin (BTC) / Bitcoin Cash (BCH) Fork
Wow, there's always someone who doesn't want to play fair . . . Good for Bitfinex for doing what's right for their clients!
Here's the Bitfinex Announcement to their clients on August 2, 2017:
"August 02, 2017
BCH Distribution Update
Bitcoin Cash (BCH) distributions have been calculated for qualifying Bitfinex users, and corresponding balances have been credited. Balances were aggregated across wallets with the resulting BCH being credited to each user’s Exchange Wallet.
What follows is an explanation of the calculations and adjustments used for determining the distribution coefficient.
The Numbers
After the fork, Bitfinex held 101,798.8855 BCH to distribute coming from 131,237.8562 BTC in settled wallet balances and -29,438.9707 BTC in unsettled margin positions, resulting in a distribution coefficient of 0.7757.
However, after adjustments for manipulation attempts (outlined below), the final coefficient used for distributing BCH was 0.8539
The Situation
The intent of the BCH distribution mechanism was to protect lenders who were already locked into loans at the time of the announcement and to avoid distributing negative balances to shorts on an uncertain value of an unproven digital asset.
With this intent in mind, the BCH tokens were distributed with an adjusting factor to account for long/short imbalances in gross margin positions. Accordingly, as shorts would not have to ‘pay’ BCH, we believe it was fair and symmetrical to not credit margin longs, yielding an adjusting factor that historically seldom varies more than 10% when compared with gross balances.
After the methodology announcement on July 27th, several accounts began large-scale manipulation tactics in an attempt to obtain BCH tokens at the expense of exchange longs and lenders on the platform, causing the distribution coefficient to artificially plummet.
We have determined that this kind of manipulation - including wash trading and self-funding shorts - is in violation of Bitfinex’s terms of service. Those who intended to take unfair advantage of the circumstances surrounding the BCH distribution at the expense of other users have been sanctioned accordingly.
The Resolution
Upon careful review and analysis, we have decided to disallow any hedged BTC balances in excess of any such hedged balances that may have existed at the time of the July 27th distribution announcement. While this may be disappointing to some, it is welcome news to the many users with bona fide BTC exposure through settled wallet balances. This adjustment increases the distribution coefficient from 0.7757 to 0.8539.
We do not take this action lightly. The inadequate timelines imposed upon Bitfinex forced swift action when addressing and remediating this situation. Our purpose has been to distribute all BCH to our users in the fairest way possible. Given the aforementioned restrictions, with our corrective actions, we believe that we have made good on that promise."
Posted on www.bitfinex.com
Well, done Bitfinex! I can see why the @dollarvigilante likes you. And, thank you, @dollarvigilante for steering me in the right direction to move BTC to Bitfinex to get BCH at the point of fork.
(UPDATE/NOTE: It was pointed out to me by @martinwallace that Bitfinex did not provide a 100% match on BCH at the BTC fork. That's true. While I'm not wild about that, there is still a good reason to use Bitfinex. Check out my article addressing this: https://steemit.com/bitcoin/@mama.sue/kraken-vs-bitfinex-paying-attention-to-calculations-pays-during-bitcoin-btc-vs-bitcoin-cash-bch-fork
Wasn't Bitfinex one of the ones who only distributed a percentage of the BCH that they should have owed their users?
Seems like they are either keeping some of it for themselves or they don't actually own enough BTC to cover all of their users wallets.
You are right about that! In fact, I just posted another article about the difference. I got 100% match on Kraken, but spreading risk between more than one exchange can be worth it. I've been in tech business for many years and things definitely can go wrong.
True, although if you really want to reduce your risk you should be keeping your BTC in a hardware wallet or at least a paper wallet. If you're not day trading there's no point in having it on an exchange.
Although during this fork the folks who kept their BTC on exchanges like Bittrex got first mover advantage to dump their BCH so it definitely worked in their favor.
All good points. I agree about wallet vs. exchange. Did you get some BCH and decide to dump it? I'm curious about various perspectives on to keep it or not.
I dumped mine as soon as possible. Unfortunately, by the time I was able to get it onto an exchange it had already crashed pretty hard.
By the looks of the BCH charts, I would say a lot of other people did the same.
Good for them. I use Bittrex and I believe between Bitfinex and them these are two solid exchanges. Unlike Polo which is having issues.
Upvoted/followed.
I heard there are issues at Polo, but didn't hear details. What's up? Is it bad enough to move from them?
Few different things. They've been having really bad "connectivity" issues. People can't trade, access accounts etc. They recently changed their TOS and apparently it's written in a way that means they can keep all of the BCH they haven't credited to users yet. Also, there are rumors circulating that they might be insolvent. And some recent hacks and people losing their coin.
Hmmm. That doesn't sound good at all. That is just the kind of thing that I'm cautious about when it comes to technology. It's only as good as the people who build it. Which do you like better between Bittrex and Bitfinex? Have you tried Uphold or Kraken?
Personally Bittrex because they've always been quick with support tickets. They were fast with the BCH payouts and quicker than most at bringing BTC and BCH deposits/withdrawals online.
Kraken took so long to approve my verifications I had to move on. It was over 5 weeks before they let me trade. I haven't tried Uphold.