Markets and Prices
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By
Samuel Haig
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6768
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Several Exchanges Experienced Difficulties During Bitcoin Cash Distribution

Several major cryptocurrency exchanges experienced a number of difficulties during the highly anticipated bitcoin cash distribution that took place yesterday. From 12:20 UTC onward, customers of Kraken and Bittrex experienced several interruptions to login functionality, whilst Bitfinex reported that traders had attempted to manipulate its bitcoin cash distribution coefficient.

Also Read: Fork Watch: Japanese Exchanges Embracing Bitcoin Cash Post-Fork

The Bitcoin Cash Distribution Resulting in a Flood of Traffic to Several Exchanges

Exchanges Experience Difficulties During Bitcoin Cash Distribution

Yesterday’s forking of the bitcoin network and subsequent bitcoin cash distribution comprised the most highly anticipated cryptocurrency event in recent years, with several exchanges experiencing an extreme flood of traffic as traders raced to access their accounts.

Bittrex was the first exchange to complete its bitcoin cash distribution, having taken a snapshot of wallet balances at 12:20 UTC – the time at which the hard fork had been expected to take place. With the 12:20 UTC approximation proving to be an hour premature, a flood of Bittrex customers raced to access their bitcoin cash tokens that did not yet exist. The flood of traffic resulted in many traders being left unable to access their accounts for approximately one hour, whilst Bittrex rushed to re-enable log in functionality.

Kraken also experienced a flood of traffic during the bitcoin cash distribution, resulting in several interruptions to the exchange’s login and trading operations leading up to and after the fork. At 12:45 UTC, Kraken posted that it had identified a number of “performance issues” resulting from “very heavy site traffic heading into the Bitcoin Cash (BCH) fork”, and reminded traders that “BCH account balances and trading will not be enabled until well after the 6th block with a timestamp of 12:20pm UTC or later”. At 13:36 UTC Kraken stated that “Bitcoin Cash (BCH) trading is now live”. This announced proved premature, and likely exacerbated operational difficulties, with the company posting that “BCH balances have not been credited yet. We are still working to credit BCH balances to accounts” just 4 minutes later. At 14:36 UTC Kraken announced it was “still seeing extremely heavy traffic to the site and login functionality is currently down.” Kraken would not complete it’s bitcoin cash distribution for another four hours, experiencing numerous operational difficulties throughout.

Bitfinex Reports to Have Identified Manipulation Attempts by Traders Attempting to Accrue Additional Bitcoin Cash

Exchanges Experience Difficulties During Bitcoin Cash Distribution

Bitfinex had a unique policy for their bitcoin cash distribution. According to a statement issued on July 27 by Bitfinex, the exchange would distribute bitcoin cash to “all BTC wallet balances”, and bitcoin lenders. The announcement stated that “Margin longs in BTC/USD and margin shorts in XXX/BTC will not receive BCH” and “Margin shorts in BTC/USD and margin longs in XXX/BTC will not pay BCH”. Due to the methodology employed, Bitfinex anticipated that it may see “a surplus or deficit of BCH”, and would be resolving the “discrepancy in the form of a localized distribution coefficient.”

After the fork had taken place, Bitfinex claimed to have held 101,798.8855 BCH to distribute to 131,237.8562 settled bitcoin wallet balances and -29,438.9707 BCH in unsettled margin positions, resulting in a bitcoin cash distribution coefficient of 0.7757 – however, the coefficient was changed to 0.8539 following “adjustments for manipulation attempts.” Bitfinex stated that “several accounts began large-scale manipulation tactics in an attempt to obtain BCH tokens at the expense of exchange longs and lenders of the platform, causing the distribution coefficient to artificially plummet.” Bitfinex has stated that those who attempted to execute “this kind of manipulation” were in “violation of Bitfinex’s terms of services” and have been “sanctioned accordingly”.

Did you experience any difficulties accessing exchanges during the bitcoin fork? Share your experience in the comments section below!

Images courtesy of Shutterstock and Bitfinex

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  • Eki Mob

    Bitfinex did warn of their coefficient plan BUT they basically stuffed their HOLDing clients with their decision. If you HOLD BTC on Bittrex you should get 1:1 on your BCC. Not some lesser amount of 0.8539 BCC per 1 BTC just because other people had shorts. So we the HOLDERS pay the price for people who take SHORT positions. Seems rather unfair doesn’t it.

    And that is why you never trust any of these exchanges to do the correct thing.

    Kraken on the other hand did allocate 1:1 for HOLDers. And sent a bill to those with short positions. They didn’t make the HOLDers pay the price for other people’s gambling!

    • sukramko

      price you pay not understanding the power of private key

  • Peter Griffin

    I am currently in the process of withdrawing my Bitfinex balance and moving to Bittrex. How they’ve handled this and screwed over their customers who’ve never touched margin before is the huge kick in the teeth.

    • dr evil

      you could have withdrawn the coins before the fork though.. bitfinex did show their plain before it happend. and ppl knew it’s was not going to be 1:1

      • Peter Griffin

        Yeah, hindsight is a wonderful thing. I stupidly thought that statement only affected traders in margin positions.

        • Jas On

          @wonkytonky:disqus r evil, their statement never once said 100% settled BTC holders would not receive a 1 for 1 of BHC. In actuality they said ~1.09 in their example of BCH per BTC and then they spoke directly about margin account holders in saying you could receive less.

          Nobody would send their BTC to Bitfinex knowing they would receive less than a 1 for 1 share of BCH, so that is a false statement that people should know better.

          The simple math is 100% BTC settled accounts get 1 for 1 BCH and then the margin account holders both long and short get the remaining amount using the screwy Bitfinex math.

          The BHC for long non-margined accounts belongs to BTC holders. BitFinex doesn’t own the BCH nor do they get to decide where that BTC goes. They have something going on internally or are dumb at math or there are margin holders who are involved directly with Bitfinex for this type of manipulation and theft to occur. This will not be the end of it and Bitfinex is in a serious situating around the whole BCH fiasco.

  • nirmal

    I got my Bitcoin cash via bittrex there was no problem in claiming that

  • Daniel Delaunay

    Fuck Bitfinex!
    For sure they will be in trouble for what they did with holding clients after a lawsuit makes them give back what was not theirs to take!