With the socialized losses initiative being set up by Bitfinex, many people feel this is the best way to keep the exchange afloat. But under Hong Kong law, it is not possible for the company to enforce this decision, ass there is no legal bankruptcy protection. It is still possible to open lawsuits against the company, and even force them to prove their solvency. Failure to do so would allow creditors to take control of the platform.
Bitfinex Can’t Force Anyone To Do Anything
The majority of Bitfinex users feel they have no other choice than accept the balance reduction. That is not entirely accurate, though, as the company cannot legally defend this decision by any means. It is evident this move was made because the company can’t pay the missing balances themselves.
While some people may argue it is better to lose 36% compared to an entire account balance, there are those who feel otherwise. Technically speaking, Bitfinex stole 36% from every user, which it cannot do in a legal manner under Hong Kong legislation. Those users who wish to pursue legal action have every right to do so, albeit the outcome will not be guaranteed.
It is doubtful people will join forces to take legal action against the Bitfinex exchange, though. Handing over the exchange to creditors – assuming BF would be insolvent – would not help account holders all that much right now. They would not be able to access their own funds- or what is left of it – and the process could take several years to complete.
At the same time, this also poses the question as to whether or not we should let these companies get away with things scot-free. Bitfinex should be held accountable for what they have done, yet that is much easier said than done right now. Filing a petition could help, but only if enough people join this initiative against the exchange.
People have to keep in mind that these bail-ins – as that is exactly what has happened- will not make the problems go away. Granted, Bitfinex is stable for now, but they have an enormous outstanding debt to their users. With confidence in the exchange shaken up, the recovery process will be a very long one either way.
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