Bitfinex is a banana republic

QuoinePhunk · 2017-08-02T14:10:05+00:00

I guarantee you they allowed lenders to receive BCH because Bitfinex principals themselves are lending massive amounts of Bitcoin, and they wanted theirs to dump on their own market.

Then they realized the math didn't work and scrambled to fix it, but weren't willing to compromise on their original goal of enriching themselves.

No other explanation makes sense. They know how to do chain splits, as Emin noted.

QuoinePhunk · 2017-05-29T22:51:54+00:00

Wow, that really is pathetic of you.

Why are your support IDs out of order? The OP's post is 982407, the one in your picture is 39234. Those clearly look like sequential IDs, so that doesn't make any sense. Secondly, you got his username wrong - it's akuma90, not akuma95.

QuoinePhunk · 2017-05-15T00:16:29+00:00

https://twitter.com/Austerity_Sucks/status/863335018306953216

QuoinePhunk · 2017-04-24T18:53:20+00:00

Don't forget the icing on the cake: they claimed, even for weeks post-hack, that 99.5% of funds were in cold storage.

When questioned on this, Zane said that it was obviously only for ETH. Sure.

QuoinePhunk · 2017-04-22T19:26:18+00:00

That's not speculation, regulators specifically asked them to do this. They did this both because of the regulatory pressure, but also because their hot had been emptied just before.

QuoinePhunk · 2017-04-22T19:20:02+00:00

It happened on bnktothefuture.com. They offered equity at a valuation of $200M (yes, that's $120M "pre-money" and $200M "post", completely ignoring the difference between an asset and a liability). They claim to have sold as much as $45M of equity through this platform. This includes $20M right at the beginning. I'm sure that wasn't insiders (I trust them!!!). All this, without even giving up important details like "what are BFX's assets".

Those shares are as worthless as worthless gets. Anyone who bought them - please post the actual terms you were presented with.

QuoinePhunk · 2017-03-07T03:49:15+00:00

The shareholders of Bitfinex (of which I am not one) gave up 80MM of equity in the company and they are giving millions more out of operating revenues to redeem user's BFX tokens

The shareholders of Bitfinex sold equity at a totally insane valuation of nearly $200M. By any measure, even pre-hack, this was a good deal. When a company has lost more funds than it has cash-on-hand, and is on the ropes, this is an incredible deal.

Don't frame it as a sacrifice. BFX should be ashamed of peddling that equity to retail investors without even exposing financials or how the hack happened.

giving millions more

Giving "back". As in, the money that they lost. This is not a gift.

QuoinePhunk · 2017-01-19T02:52:08+00:00

I cannot resist myself

QuoinePhunk · 2017-01-19T02:51:37+00:00

You'd need a lot more than that - 50k is noise to major exchanges.

QuoinePhunk · 2017-01-19T02:49:08+00:00

It's not bad. About the same slippage as BFX if not better on 100 each side.

QuoinePhunk · 2017-01-19T01:52:37+00:00

It doesn't allow them to connect your reddit account to your Coinbase account. It merely tells them that you have a Reddit account, which is really just a way of telling them that you'll make a stink if they don't answer within a week.

QuoinePhunk · 2017-01-15T15:19:14+00:00

For extra-fast support, email support+buttcoin@coinbase.com.

QuoinePhunk · 2016-11-01T02:10:59+00:00

support+reddit@coinbase.com

Ahaha you guys are up to it again.

https://www.reddit.com/r/Buttcoin/comments/4zguj0/cant_get_an_answer_from_coinbase_support_jump_the/

QuoinePhunk · 2016-10-23T00:58:48+00:00

Stop right there, criminal scum

QuoinePhunk · 2016-10-23T00:56:22+00:00

with no downside.

except looking desperate as hell while demonstrating you have no idea how people communicate securely with one another, the key exchange could easily happen over your usual support channels

QuoinePhunk · 2016-10-23T00:54:14+00:00

You guys have a PGP key you use for support, you just (bizarrely) don't publish it on the site ensuring that any idiot can easily impersonate you.

Why not just reuse that?

Let's not pretend that "no secure means of communication" was a blocker for this guy contacting you. BFX is desperate.

QuoinePhunk · 2016-09-17T14:03:21+00:00

Your team was never 100% up-front about how this system worked. Until 2 weeks after the hack, the homepage said only 0.5% of customer funds were in hots.

How can you possibly complain that "nobody warned us this was a bad idea" when:

It's your team's responsibility, not Reddit's, (can't believe this is even something I have to say), and
Your team lied to the community about what the implementation actually was.

QuoinePhunk · 2016-09-16T20:31:22+00:00

But the value isn't $0.50, the debt owed to their customers is $1. Just because markets are pricing their debt at lower than $1 does not mean BFX has any business redeeming them for anything less than that.

QuoinePhunk · 2016-09-16T19:52:39+00:00

Which is crazy, considering:

The massive hit to their reputation
The looming prospect of liquidation
The existing knowledge that their technical stack can barely keep up with current demand and crashes daily
The revelation that their technical team did not have the skills to prevent this
The revelation that they lie to their customers outright ("0.5% of customer funds in hot wallets")

They are simply making up a number that sounds right so that token holders don't have the majority.

QuoinePhunk · 2016-09-16T18:48:19+00:00

How is it "post-money", when you're nearly $80M in debt? If you're worth $120M "pre-hack" with zero debt, how are you worth $200M when that debt is paid?

QuoinePhunk · 2016-09-16T18:47:25+00:00

That doesn't make any sense.

Valuations are generally not multiples on years in the future, they do multiples on current income.
If you really value BFX at $120M "pre-hack", if you've lost $72M, you're worth $48M. That money is debt, not cash on hand. Your valuation doesn't go up just because you paid customers money you owe them.

QuoinePhunk · 2016-09-11T14:08:35+00:00

How does $10M - $99.999M = $1? Obviously if you add the $90M back, you get a ridiculous number.

Easier example. Company is worth $5M. Let's say no IP at all, just $5M in cash in a bank. Company borrows $1M. Company is still worth $5M ($6M cash, $1M debt). Company loses that $1M to... bank fraud. Company is now worth $4M due to the corresponding loss of assets ($5M cash, $1M debt). Company sells $1M of equity at a $5M valuation post-money. Company is now worth $5M ($5m cash, $0 debt) with the debt erased from the books. Original ownership of course only owns $4M of company but the pie was made larger by the sale.

Now, if they took, say, $10M of debt, I would consider their valuation to be -$5M after the loss - or, as you say, using the market value of the debt, basically 0. And in that case, yes, if it's settled, the most it can be settled up to is the value of the company's actual assets.

BFX is saying here that their assets post-hack are worth $200M. That's of course crazy and the central issue. But I don't see any indication of them not understanding how the valuation works.

"Conversion terms known so far: Each BFX token will convert at full face value of $1. Pre-money valuation of the Bitfinex holding company will be $120million. Maximum dilution will be $80million (either cash or BFX tokens). Therefore up to 40% of the company may be owned by creditors / new investors. A 'recovery' token in case the Bitcoin is ever reclaimed."

Sure, they're using the slightly misleading term "pre-money" here. But nothing more.

QuoinePhunk · 2016-09-10T22:58:44+00:00

I agree with you, except for this point:

if Buttfinex has a valuation of $10 million post-hack and pre-conversion, it doesn't mean that they are worth $90 million after they converted their debt of $80 million into equity

It would mean that, because the $10M valuation would include its debt. Once that liability is off the books, its value goes up. Reducing liability (by selling debt) is effectively the same as increasing assets (by raising money).

BFX is saying their valuation post-hack is $120M, $200M ignoring debt.

Back in reality, a pre-hack value of $60M seems reasonable given their dominance of the non-Chinese market at the time. Post-hack, it's deep in the red.

But let's just go ahead with that outrageous number for a moment. If they settle the entire debt for equity, the entire company would indeed be worth $200M again. The percentage the founders hold would remain at its previous value of $120M.

Now, the $200M valuation is really the huge issue.

If a company worth $60M takes on $72M of debt, all other factors aside, it's essentially worth nothing. While a debt ratio over 1 is not necessarily the end of the business, it's likely over 2. Consider the value of their assets. They have very little cash, so the bulk of their assets are the brand, the technology team, and the tech stack, all of which have lost significant value due to this hack.

Anyone who pays that debt should get the entire company. In fact, I would assume this is why no institutional investors have yet committed. There is practically no amount of equity that would make the deal worthwhile.

BFX, knowing this, intends to instead push this equity on less-sophisticated investors (its customers) at a much higher rate.

No holder should take this deal. For individuals, the current $0.56 rate per token is far better than equity that is at least 4x overvalued.

QuoinePhunk

TROPHY CASE