Open letter to Bitfinex support and dev teams
I’ve tried to start negotiations with Bitfinex, explained that threatening community with litigations is an extremely bad decision and proposed better solution, but they ignored me so this time there will be series of open letters and every Bitfinex employee can read them.
The first open letter was addressed to CoinDesk to find out why they aren’t covering most Bitfinex issues as other media does and if there is any COI (conflict of interest). After that people gave me many links about possible connections between Bitfinex and CoinDesk (see the end of this article).
This open letter is addressed to Bitfinex support and development teams. There will be no sensational investigation, but an honest talk, because I believe that most people are good, they just sometimes take a wrong path and don’t know how to change it.
Disclaimer: I wanted to focus on other projects, but recently there were multiple flash crashes on Bitfinex again and more people got rekt. Additionally Bitfinex just enabled margin trading for BTG so even more people will get rekt. Thus I have to continue… otherwise how can I look in the mirror?
Financial education
Most people have very low financial education, and at the times of crises or changes of financial paradigms they try to allocate their funds in a proper way without deep understanding of risk-management and portfolio-management.
That’s their fault and they should educate themselves first, right?
Yes. However, most of them are busy with regular 9 to 5 jobs and families, contributing to society every day and protecting us from diseases, fires, criminals, making our food, educating our children, driving cabs, cleaning our rooms, creating goods, arts and even sometimes saving out lives.
What should we, people with a good financial education, do in return?
Should we take away all their life savings to ensure that they will work for the rest of the life as slaves, or should we point out their mistakes and try to educate them about risk-management and how to properly invest in crypto assets so we all can benefit together as a community?
If you feel OK to take away all their life savings and spend on lambos, then how are you better than criminals and thieves? And why then should anybody do anything good to you?
social_bfx, bfx_drew and the whole support team
I’ve read lots of your comments, posts and letters, trying to understand what kind of people you are. You seem to work hard and to care about customers.
But I don’t understand how can you help people every day with their deposits issues knowing that soon they will lose everything in a new wave of flash crashes or stuck in a withdrawal limb for weeks without a normal sleep?
How does it feel?
Do you want to urge users about huge risks associated with Bitfinex but you cannot do it? Then why are you keep helping people to lose their money?
- You knew that Bitfinex denied any technical issues during multiple flash crashes on November 29 and unlike GDAX, refused to reimburse victims.
- You saw all the evidences that it was not a “normal market move” and allegations in a favor of technical issues.
- You knew that Bitfinex hired a law firm to threaten all critics (including victims) with litigations.
- You knew that flash crashes might come again (they did on December 22).
Why you didn’t save all these people from losing money?
Why you even helped them to lose their money by solving deposit issues?
Because it’s your “job”?
That’s not a good excuse.
Please think about that when the next time you have a dinner with family, see a doctor, send your children to school, get a cab, go to a restaurant or watch a movie.
Are you contributing to society and helping people or ruining their lives?
We all have energy, time and resources. Are you spending yours to build a better future?
Paolo Ardoino, Chris Ellis and the whole dev team
I used to like Bitfinex for good UX, convenient UI and many security features.
Bitfinex two times officially stated that there were protection measures against flash crashes (2015, 2017), and yet you didn’t admit that these measures totally failed and Bitfinex didn’t reimburse victims denying any technical issues.
I don’t know if it was a problem with functional specification, bad code, not enough automated tests, weak ad hoc testing, tight deadlines or all together, but as a result people lost millions in a few moments.
Are you seriously trying to convince people that protection measures that allowed 98% price fall in a few seconds are well-implemented and tested?
A 98% price gap between bid and ask for 38 seconds? Was API working? Protection measures? Where were all arbitrage bots? Still no technical issues?
There was no malfunction in matching trades nor with mechanisms to slow down the drops on multiple markets. Your position was liquidated as it should be.
Can you honestly sign this statement?
Can you tell in front of the audience full of developers that there were no technical issues?
Can you tell in front of a mirror looking into your eyes that you are not responsible for people losing millions?
Will you be able to explain that to your future colleagues or employers? Will you tell that to your children?
There are critical bugs in every web product, but when these bugs cause serious damage to users, respected companies admit that, fix bugs ASAP and reimburse the victims as GDAX did.
Did Bitfinex admit technical issues and reimburse victims? No.
Did Bitfinex fix protection measures against flash crashes? No.
On December 22 there were multiple flash crashes again and more people got rekt. This time prices didn’t lose 98% in 2 seconds, but they did fell down much lower than on other exchanges and lost up to 60-70% (Ripple, IOTA), causing a massive cascade liquidations again.
Do you feel that this is good for community and for your developer career?
Fixing flash crashes
If you don’t have resources to fix flash crashes, then solution is simple.
Disable stop-loss orders and margin trade for all altcoins, because currently users might lose everything in a few seconds just by using any stop loss orders or any margin with even a smallest leverage (e.g. x1.5 instead of x3.33).
What did you do instead?
You added more margin trade so more people can lose money! Bravo!
social_bfx? Paolo? Chris? Ronn? Phil? Anybody? Seriously?
This is how you treat the community?
One of your main competitors has no margin trade, no stop loss orders (only stop limit), but their daily trading volume is higher than yours. Their reputation is clean and so they are growing while you are falling.
Reimbursing victims
I hope that you didn’t start flash crashes by yourselves because it’s not a good long-term strategy. However, you know exactly who did it and who earned millions in a seconds by exploiting system vulnerabilities. People cannot withdraw such a big money without full verification and manual approval. You took their side and covered them up.
If Bitfinex trading volume is not fake, then you make millions in fees every day, so you could easily reimburse the victims of flash crashes.
You know exactly what caused flash crashes, who started them and how to prevent them in the future.
What side will you choose?
Contribute to community and help people build a better future together?
Or try to take away all their savings and call them stupid noobs who know nothing about risk-management and over-leveraged margin positions with illiquid assets on unregulated market?
The choice is up to you.
Happy New Year and may the honor be with you.
P.S. Chris Ellis, thanks for warning the community!
Read next:
Use the most secure, private and intuitive way to exchange ether (ETH) with others for your local currency — LocalEthereum. You can either create a new password-protected account or log in with your favorite wallet like Ledger, MetaMask, or mobile apps like imToken.
Disclaimer: this article is for educational purpose only and it’s not a financial advice. Seek a duly licensed professional for investment advice.
