The ongoing situation concerning the BTC-e exchange continues to spark debate among cryptocurrency enthusiasts. In its previous update, the company had announced the creation of an IOU token and a reduction in customer balances. After receiving significant community feedback, it appears the plans have changed once again. Despite the uncertainty, it is good to see the company working on new solutions.
New BTC-E Update Offers Some Good News
Ever since the BTC-e exchange platform went offline and its domain was seized by government officials, cryptocurrency users have been asking many questions. The most pressing issue has been whether or not customer funds are safe. For now, that may not be the case, although the BTC-e team claims to have access to roughly 555% of all customer funds right now. The remaining money has officially been seized by government officials and law enforcement agencies, with no chance of recovery by the looks of things. This leaves a big financial hole to fill in the company.
In the previous update it shared with the world, the BTC-e team offered to give all users a balance haircut. More specifically, the missing 45% of funds would be deducted from user balances and they would receive so-called IOU tokens in return. Every IOU token would be valued at US$1 and would be redeemable at market rates at any given time, assuming there were enough demand for them. This proposal didn’t sit all too well with the cryptocurrency community, though.
BTC-e received a lot of helpful feedback from the community and thereafter came up with a new plan. The company reiterated that its goal is to treat all users fairly and ensure the missing funds may be recuperated in one way or another. According to the new plan, there will be a recalculation of all currency balances. This will be done by taking the available assets into consideration. This means that 55% of all current balances will be credited as currency immediately, with the remaining 45% provided in the form of a specific currency token.
All currencies will be getting associated IOU tokens, which can be traded on the exchange free of charge. These tokens will not have a fixed market price, which means there is plenty of room for arbitrage opportunities and recovering some initial losses pretty quickly. However, considering they will never have more than their face value, the room for financial gain is pretty limited unless one steps in at the right time. It is a fair plan, all things considered, and one that makes it clear to users which outstanding balances they have yet to recuperate.
The long-term plan of BTC-e is to eventually redeem all outstanding tokens, although it is hard to tell how long that process will take. If the Bitfinex IOU situation is to be considered, the process could be settled as soon as a few months from now. It’s far from an ideal situation, but it guarantees BTC-e’s users will eventually get their money back in one way or another. It’s good customers are getting the option to either trade IOUs at face value or try to get rid of them below the normal price in an effort to move all funds out of the exchange sooner rather than later.
BTC-e users who had 1 BTC in their account balance last month will receive 0.55 BTC and 0.45 BTCT in the near future. The actual cryptocurrency funds can be transferred out immediately if the users prefer to take that course of action. The remaining tokens will be available for trade or exchange at face value at a later unspecified date. It is a simple process, yet it remains a bit unclear when users will have access to their balances. This plan by BTC-e seems pretty solid, to say the least, although it remains to be seen how long it takes to recover all missing funds.