Digital Currency Exchange Bitfinex Limping Along Following $70 Million Bitcoin Mega-hack in August

Image credit: Gustavo Molina

Hong Kong-based Bitfinex used to be one of the top Bitcoin exchanges in the world, but the devastating hack on August 2, 2016 - where $70 million worth of client Bitcoin deposits disappeared overnight - left Bitfinex fighting for dear life and plenty of furious customers.

The exchange managed to re-launch on August 7, and on the 10th, Bitfinex allowed traders to withdraw approximately 63.933% of their money, after imposing a 36.067 percent haircut across all depositors.

To offer some measure of relief to angry customers, Bitfinex also launched the BFX token, which was essentially a promise by Bitfinex to repay client losses at some point in the future, assuming sufficient revenues and influx of capital from investors materializes. Bitfinex opened the token for trading and launched a Special Purpose Vehicle (SPV) on the BnkToTheFuture crowdfunding platform on August 22, where qualified (non-US Bitfinex users) BFX token holders could convert their tokens to ownership shares in Bitfinex itself.

In addition to the token conversion program, Bitfinex has conducted two BFX token redemptions where a certain percentage of all outstanding tokens held in wallets on the platform are converted back to dollars. The first redemption took place on September 1, 2016, where 1.1812% were redeemed, and another redemption took place today for 1.3152 percent.

Two months after the hack:

Despite good-faith efforts made by Bitfinex management to restore investor confidence, volumes on the exchange are currently a small fraction of what they were prior to the monumental theft. Data from shows the drastic drop in volume on the Bitfinex BTC/USD pair after the hack:
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Almost two months after the incident, USD margin funding volumes on Bitfinex have also not recovered. Prior to the hack, daily swap volumes would easily exceed $5 million, post-hack, daily turnover hardy goes above $2 million. This chart from illustrates this fact quite well:

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At press time, the majority of trading on Bitfinex takes place on BFX/USD and BFX/BTC, with 24h-volumes on both pairs at $1,067,731 and $464,592, respectively. The other two pairs that have any notable volume are ETC/USD and ETC/BTC. Volume on the BTC/USD pair over the last 24h, last 7 days and last 30 days is quite small compared to the figures on the other pairs.

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While volumes indicate that investor confidence has not been restored just yet, the BFX token - which crashed down to $0.20 on opening day - is now trading at $0.60!