I don't think the non-BTC accounts are protected. Even if they were also segregated accounts, the bankrupty of Bitfinex should view all segregrated accounts in equal legal standing, thus they all must suffer proportionally.
The theft is Bitfinex's liability.
So all non-BTC accounts on Bitfinex should be affected proportionally. I presume Bitfinex will eventually realize this. Unless law is somehow different in Hong Kong.
I presume the knee-jerk selloff of BTC is an overreaction. Bitfinex still has significant resources, so everyone on Bitfinex should probably get a loss but not a total loss.
The theft is Bitfinex's liability.
So all non-BTC accounts on Bitfinex should be affected proportionally. I presume Bitfinex will eventually realize this. Unless law is somehow different in Hong Kong.
I presume the knee-jerk selloff of BTC is an overreaction. Bitfinex still has significant resources, so everyone on Bitfinex should probably get a loss but not a total loss.
Joel Katz is mistaken:
As I explained four days before, your logic that bankruptcy is required is incorrect because presumably the BTC funds held at Bitgo were not partitioned according to segregated accounts, thus the BTC is part of BTC and non-BTC pool of assets which backs all segregrated accounts BTC and possibly also non-BTC. Your logic would only apply to physical non-fungible assets. Thus even if Bitfinex were not bankrupt, it would still need to spread the loss proportionally to all "segregated" accounts BTC and non-BTC. The concept of segregated account is not to be used for what you are thinking, rather it is to protect the account holder from a lawsuit against Bitfinex which would attempt to grab those assets marked as owned by the segregated account owners. But since these assets are not partitioned by account number, then all of the BTC and possibly also non-BTC accounts are of equal standing w.r.t. to the asset pool. So although Bitfinex would be bankrupt if they could not pay the BTC account holders out of proportional losses for other account holders (BTC and/or non-BTC), they do not have to declare bankruptcy in order to spread the losses proportionally, unless the assets were partitioned by segregated account number. But with a fungible, electronic asset, it seems entirely arbitrary to mark some fungible units for some accounts if all were accessible by the same password set vulnerability. The vulnerability indicates the assets were not partitioned, at least not for all BTC account holders although perhaps one could make an argument that the non-BTC assets were partitioned since they were apparently not subject to the same vulnerability as partitioned. QED.
In other words, the pertinent qualifier is, “segregated from what?”. The crypto assets were segregated at least from the other business liabilities of Bitfinex, but not from each other (or at least not BTC accounts segregated from each other).
In other words, the pertinent qualifier is, “segregated from what?”. The crypto assets were segregated at least from the other business liabilities of Bitfinex, but not from each other (or at least not BTC accounts segregated from each other).
