Topic: Bitcoin Companies Who Reimburse Losses Stay Alive (Read 2390 times)

A recent blog post from Xapo called “What happens if Xapo gets hacked?” the company discusses the unfortunate Bitfinex heist that took place on August 2, 2016. Xapo says that if they were compromised the company would cover the losses from its own reserve. This is a glaring difference to the many exchanges that failed to reimburse their customers.

It will be interesting to see how Bitfinex fares after their losses as it was the biggest Bitcoin exchange heist since the demise of Mt Gox. It’s safe to say exchanges that don’t pay their customers back in full will discourage new users from entering the Bitcoin space.

https://news.bitcoin.com/bitcoin-reimburse-losses-stay-alive/

Since they can't be held legally to act on that statement, it really doesn't help.
Plus they may not have enough reserves to actually refund customers if they were hacked.
So the question of whether they intend to refund customers is moot.

How do you identify the companies that will give you back the stolen money?
The only one that I know is Xapo which made a public announcement but which another company behaves the same?

On a different note, this is probably why some people wants to push for tighter regulations of exchanges.

Who would trust words from exchange/services which isn't strictly regulated, don't forget cases such as Bitfinex and Mt. Gox
On other hands, few people still use this kind of services even though they know the risks and know there's other choice such as decentralized wallet or hardware wallet.

It’s really not surprising. Customers trust companies that care. I would stick with a company if they gave back what was stolen due to an error on their end. The fact that it is bitcoin makes it even more important. Many people want security with bitcoin and by reimbursing people for their losses that helps to build invaluable trust.

Talk is cheap.

Xapo also claims that they will compensate their customer in case of hack and their customer will not lose anything. I think this is just a marketing tactics.
If ever Xapo get hacks then we shall see a different recreation from their team as they cant give lost bitcoins to customers from their own pocket.

Xapo claims to have bought the most secure cold storage ever by having an actual physical cold stored bunker in some weird place in the middle of some mountains or something like that. If those guys get hacked too it would be a disaster, no way they would recover. Bitcoin can recover of anything at this point, but it would suck.

but I think that they have got any investor which invested there and those funds can cover the loss.
I don't know what have they planned and how will they deal in the future, increasing the fees? or any other extra service which can generate income.

if the recovery plan is based on trading fee's recouping losses.. then lets take bitfinex for instance
they have done $4.5m in volume today based on https://coinmarketcap.com/exchanges/bitfinex/
which at a 0.3% fee (0.1% take 0.2%make) works out at $13.5k in fee's
even if they ploughed every penny of the fees into making everyone whole. its still 5,300+ days (upto 15 years at current volume) to actually make people whole again

so bitfinex for example better have some reserves. or can buy the debt back at pennies to the dollar as a settlement agreement with their creditors/debtee's(customers) or they are in for a world of hurt

after all
lets pretend they never needed to spend any money on wages, offices, servers, etc over the last 2 years, just so they could build up a reserve.
checking* they had an average $6million trade volume a day* ($20k fee) it would have still taken them 10 years to rake in enough reserves to have $72m.
*2 year average from stats

knowing they actually were spending fee's on business costs over the last couple years. there is no way they have reserves to cover the loss and no way they can make anyone whole again in the next couple years using future fee income either.

not unless some numpty buys the business valued at (-)72mill for a single $1. and puts in the other 72m to make customers whole again.
.. knowing that at their best years (prior to hack) it would take 10 years to just get 72m in fee's before business cost deductions. i cannot see any numpty investing 72m to make customers whole..
or as i said not unless they can settle with their creditors/debtees(customers) with a pennies on the dollar settlement.