Over the past 24 hours, there has been plenty of speculation regarding the involvement of BitGo in the Bitfinex hack. Interestingly enough, the company seems to get away scot-free, as their internal investigation revealed no breach. But at the same time, they are the responsible party for co-signing every transaction taking place on the exchange platform. In theory, this makes them liable for any losses sustained.
BitGo Must Pay The Piper For The Bitfinex Incident
For those who are unaware, BitGo provides multi-signature cold storage solutions for Bitcoin transactions only. Even though Bitfinex deals with multiple fiat and crypto currencies, only Bitcoin balances were affected by the hack. Since BitGo has to co-sign every transaction, the question becomes how secure their solution is, to begin with.
To make matters even more confusing, Bitfinex does not seem to be inclined to hold BitGo responsible for their role in this theft either. The company has mentioned their internal investigation is not over yet, but they have come to the conclusion “the incident is their own fault.” That seems a rather strange statement, as it is evident BitGo did not perform their job adequately either.
One possible explanation is how Bitfinex did not properly implement BitGo on their end. Interestingly enough, the exchange quickly noted how they uncovered the exact way this breach had taken place, to begin with. That could mean they knew something was designed to fail from day one.
Regardless of how the agreement between BitGo and BitFinex works exactly, it is evident both parties are liable for the stolen funds. All of the platform users were under the impression BitGO would secure their funds at all costs, and that has not happened. After all, it was their solution which only protects Bitcoin which was affected by this breach.
The Bitcoin community seems to be divided over this debacle for sure. Some people feel BitGo is ultimately responsible, regardless of how their clients want to have the solution implemented. Others say Bitfinex should pay up for their own mistakes. Either way, both companies have a lot of explaining to do, and no one should let BitGo off the hook that easily.
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