Albeit the Bitfinex exchange has resumed its service, the exchange is not out of the woods just yet. Their decision to reduce user balances to make up for the stolen money is open to legal challenges. Moreover, the creation of BFX tokens as a way to offer a take in parent company iFinex is not entirely legal either. Trading these tokens would require specific licenses which the company does not own – in the US, at least.
Bitfinex is Playing A Very Dangerous Game Right Now
As we mentioned in a previous article, Bitfinex is still liable for legal action by its users, if they wanted to pursue that option. But as it turns out, the company’s issuance of BFX tokens will cause even more legal problems. Since these tokens are neither securities nor bonds, they would require special licenses to be traded in the United States. Right now, the company does not own these licenses.
Granted, Bitfinex is trying to cover their own behinds for the time being. The company mentions how there are “protocol level details” that still need to be sorted out. However, they have enabled the trading of BFX tokens against the US Dollar before sorting out any lingering issues or problems. That decision may come to bite Bitfinex in the rear shortly.
At the same time, the company can – relatively – rest assured legal action would not be in the best interest of platform users either. All of these shady decisions – the 36% haircut and creating BFX tokens – were taken to avoid liquidation of the company after losing US$65m due to a hack.
This whole ordeal poses an interesting question that will affect the future of Bitcoin as an ecosystem. Exchanges such as Bitfinex should not be allowed to get away with these shenanigans, as they are in violation of the law not just once, but twice. Unfortunately, the “legal option: will not yield much better results, and take far too long before the process is completed.
When it comes to getting no money back, or reducing losses, most traders will take the second option. Unfortunately, these morally grey areas are what gave Bitcoin a bad reputation in the first place. If we allow these things to continue, it will only give cryptocurrency an even worse reputation over time. It only takes one person to bring this whole charade down, and it is not unlikely that will happen sooner rather than later.
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