5 ms·

Here's what people tried to pull off: 1. Set up an account, borrow one bitcoin, sell it short, collect $2,700. 2. Set up another account, buy a bitcoin, spend

by smaili 9y ago

Here's what people tried to pull off: 1. Set up an account, borrow one bitcoin, sell it short, collect $2,700. 2. Set up another account, buy a bitcoin, spend $2,700. 3. When the fork happens, your long account ends up with +1 BTC and +0.8 BCH. 4. Your short account ends up with -1 BTC and -0 BCH (because Bitfinex doesn't require you to come up with the BCH). 5. Net, you have $0, 0 BTC and 0.8 BCH. 6. The 0.8 BCH were worth as much as $560. 7. That money was totally free.

thefalcon 9y ago
This is the most clear and concise explanation I've seen. Bravo Mr Levine[1]. It's worth noting that some people tried to pull this off because Bitfinex's official communications seemed to clearly state that this is how Things Would Work, at least until after the fact when they realized what a mistake that would be. [1] Ninja edit to specify to whom credit is due.
- tanderson92 9y ago
  You might consider reading the article, it's actually Matt Levine's words copy+pasted.
tpallarino 9y ago
Disclosure: Bitfinex robbed me of BCH according to the terms of the agreement, which was not amended until after the fact. The money wasn't totally free. There was a huge opportunity cost to holding BTC at that time, and even having any in the margin wallet was a huge liability as opposed to funding your margin account with altcoins. Any serious trader knew that alts would rise immediately following the fork and Bitcoin would drop. And regardless of whether it was free, their terms explicitly stated that those with a BTC balance in their wallets would receive BCH [1]. They did not issue a follow up post clarifying that hedging was strictly not allowed and thus robbed people. After how they handled both this and their hack, I urge/beg people not to use this exchange. [1] https://www.bitfinex.com/posts/212 https://www.bitfinex.com/posts/212
- harryh 9y ago
  1. Try to make free money in a totally unregulated market when an organization publishes a foolish policy. 2. Get mad when said organization amends policy so you can't get your free money. If you're gonna try to profit in the wild west it looks kind of unseemly to get mad when your scheme doesn't go off quite as easily as you had hoped.
  - tpallarino 9y ago
    1. Organization implements foolish policy 2. Thousands of people make trades according to foolish policy 3. Organization changes terms of foolish policy, telling nobody. 4. Organization then waits until after the fact to tell everyone that they have changed the policy, which dictate d the actions of a non trivial percentage of their customers. If you're going to try to look like a legitimate exchange, this kind of thing looks pretty unseemly.
    - harryh 9y ago
      If you're going to try to look like a legitimate exchange, this kind of thing looks pretty unseemly. Oh I agree! The whole thing has bitfinex looking a little foolish. It was step #1 that was the problem though. Steps 3 and 4 were them fixing it as best they could. Those parts weren't mistakes, it's just them keeping you from stealing Bitcoin Cash from their other customers.
      - tpallarino 9y ago
        I don't really see how it's stealing from their other customers when anyone with a nonzero BTC balance could have shorted BTC with BTC in their margin account. Somehow I'm penalized for trying to maximize my profit based on the terms that were stated, even though that's what every single other person on the exchange is doing. Basically they chose to favor those who didn't understand the terms or what was going on in favor of those who did.
        harryh 9y ago

by smaili 9y ago

thefalcon 9y ago

This is the most clear and concise explanation I've seen. Bravo Mr Levine[1]. It's worth noting that some people tried to pull this off because Bitfinex's official communications seemed to clearly state that this is how Things Would Work, at least until after the fact when they realized what a mistake that would be. [1] Ninja edit to specify to whom credit is due.

tanderson92 9y ago
You might consider reading the article, it's actually Matt Levine's words copy+pasted.

tpallarino 9y ago

Disclosure: Bitfinex robbed me of BCH according to the terms of the agreement, which was not amended until after the fact. The money wasn't totally free. There was a huge opportunity cost to holding BTC at that time, and even having any in the margin wallet was a huge liability as opposed to funding your margin account with altcoins. Any serious trader knew that alts would rise immediately following the fork and Bitcoin would drop. And regardless of whether it was free, their terms explicitly stated that those with a BTC balance in their wallets would receive BCH [1]. They did not issue a follow up post clarifying that hedging was strictly not allowed and thus robbed people. After how they handled both this and their hack, I urge/beg people not to use this exchange. [1] https://www.bitfinex.com/posts/212 https://www.bitfinex.com/posts/212

harryh 9y ago
1. Try to make free money in a totally unregulated market when an organization publishes a foolish policy. 2. Get mad when said organization amends policy so you can't get your free money. If you're gonna try to profit in the wild west it looks kind of unseemly to get mad when your scheme doesn't go off quite as easily as you had hoped.
- tpallarino 9y ago
  1. Organization implements foolish policy 2. Thousands of people make trades according to foolish policy 3. Organization changes terms of foolish policy, telling nobody. 4. Organization then waits until after the fact to tell everyone that they have changed the policy, which dictate d the actions of a non trivial percentage of their customers. If you're going to try to look like a legitimate exchange, this kind of thing looks pretty unseemly.
  - harryh 9y ago
    If you're going to try to look like a legitimate exchange, this kind of thing looks pretty unseemly. Oh I agree! The whole thing has bitfinex looking a little foolish. It was step #1 that was the problem though. Steps 3 and 4 were them fixing it as best they could. Those parts weren't mistakes, it's just them keeping you from stealing Bitcoin Cash from their other customers.
    - tpallarino 9y ago
      I don't really see how it's stealing from their other customers when anyone with a nonzero BTC balance could have shorted BTC with BTC in their margin account. Somehow I'm penalized for trying to maximize my profit based on the terms that were stated, even though that's what every single other person on the exchange is doing. Basically they chose to favor those who didn't understand the terms or what was going on in favor of those who did.
      - harryh 9y ago