This article title is very misleading. Huobi/BitVC did not suffer any loss
and did not take any profits. BitVC is a platform for users to trade
with each other, BitVC is not a counterparty to trades. What happened
was an automatic, proportional reallocation of UNREALIZED profits and
losses at SETTLEMENT according to the predetermined rules of the futures
exchange. There was no net loss of bitcoin. There was no reversal of trades. There was no technical malfunction.

The full explanation of what happened and BitVC's response was given in an earlier statement (http://redd.it/2mieok).

If anyone has any questions we will be happy to answer.

Sorry, but you are not telling the truth. I trade quite actively in the Chinese market and i know for a fact you have a trader who works inside huobi and is often the counterparty to many trades.... up to 35% at one point i heard from my sources inside Huobi. Please be careful with what you are doing, i dont think you understand the risk you are putting yourselves in.

They aren't putting themselves in risk, they're putting their "customers" at risk. Maybe fools is a better word than customers.

Thank you for clarifying.... I have a suspicion this article was meant to scare away customers to other exchanges.
Makes me wonder if Jon Southurst has a reading comprehension problem while spreading FUD about China Exchanges.
... also note that this was posted just a day after the article headline which reads "New Research Links Bitcoin Price Spikes to Media Hype".... any coincidence there?

Coindesk should remove this article... IMMEDIATELY!

Bullsh*&t! You dipsticks can't cover the operating expense of your own bs biz.

This exchange will slowly die. Any exchange that takes money out of the accounts of winners have no future.

If your technical risk control system failed to supervise risk levels and autoclose positions as seam to be the case. Then the exchange has to pay the winners out of its own pocket. And make the losing trader pay back the debt to the exchange.

Taking winning traders money to offset a loss is totally unacceptable.

100% Correct!!!!!!!!!

This is outright theft. Who is going to trust a trading platform which takes money from its users? just look at what happened to vircurex. it has never recovered from freezing customer funds to pay for coins that were "lost" by their system.

welcome to the wild west of bitcoins, no rules, no responsibility.

Technically there still are rules and responsibility. It merely requires someone to file a lawsuit

if that were so, it would not have happened in the first place, but it did !!
As soon as lawyers get into it, you all lose.

Repercussions do not guarantee actions do not happen. But I guess you need a quote from the Huboi website:

"15.1 Any disputes between Huobi and users should be resolved through friendly negotiation and dialogue, either party has right to submit a claim form to the Beijing Arbitration Commission for arbitration according to the rules when no settlement can be reached."

Omg, there is no dispute, and no customer funds were used. Not a single dime. The author is spreading FALSE rumors.

and actions do not guarantee repercussion do not happen!

.. and they would claim losses on what exactly?

Hell if I know. Only the users who are losing something would know. I'm not claiming there is or is not an issue. I'm only pointing out there are things they can do if they felt they needed to.

They already reimbursed the pool from its "system loss allocation policy".... In a single week!
That shows me I can trust them, and they only borrowed profit which is part of the risking leverage in the first place!.
It could have been much worse!
Nobody lost a dime except the person who made the dumb trade in the first place.

Your comment sums up my assessment of the whole situation. Huge leverage will come with certain risks. Huobi seems to be up front about everything, even when things go a bit wrong. It actually makes me trust Huobi more than some exchange that might be losing large sums and pretending nothing has gone wrong. You are just asking to get goxxed by these other secretive places.

>Nobody lost a dime except the person who made the dumb trade in the first place

and all the people who 46% of their profits taken from them. If I had 1btc profit but was only given .46btc in profit, that means a lost a lot more than a dime.

>They already reimbursed the pool from its "system loss allocation policy".... In a single week!

They didn't reimburse anything. They gave users credit on trade fees. That's a far cry from a reimbursement. What if I don't want to trade there anymore, then I didn't receive any reimbursement.

Exactly no future trades no satisfaction.

With trading credit, nah that's hogwash! Real reimbursement would have to be cash or btc.

WTF? They already reimbursed the pool from its "system loss allocation policy".... In a single week!
That shows me I can trust them, and they only borrowed profit which is part of the risking leverage in the first place!.
It could have been much worse!
Nobody lost a dime except the person who made the dumb trade in the first place.

Trade credit isn't a proper reimbursement.

Err, the author outright lied or simply can't comprehend the situation. There was absolutely NO NET LOSS OF BITCOIN, no reversal of trades, there was no technical malfunction. Trades were perfectly executed according to the rules as written. Someone (a user)simply made a bad leverage decision and lost.

Please point to the sentence where I refer to a net loss and not a system loss.

You are such a weasel.

"Net" loss?

Robbing this week's winners is the same as robbing this month's losers.

TOTAL FUD No user funds were touched. There was NO NET LOSS OF BITCOIN, no reversal of trades, there was no technical malfunction. Move along folks

you told us what did not happen,, SO what did happen then ?

"High leverages bring risk"
who would have ever thought that !!!!

You clearly do not understand the difference between leverage risk and counterparty risk.

High leverage at a properly-run exchange does NOT bring any counterparty risk whatsoever.

Or you can just keep being a stupid simpleton.

Of cause there is counter party risk if the losing trader goes under water on his account.

If the account is +100 btc and a losing trade of 200 btc makes it -100 btc, someone has to pony up 100 btc. Either the losing trader or the exchange company.

This isn't exactly news, all cryptoexchanges,BITCOIN, ALTCOIN, ECT IS A FRAUD!!!!!!!!!!!!!!

Damn, kids, again: stay away from futures, heck any derivatives, Do not copy fiat flaws.

How many times do I have to scream "counterparty risk" before you listen?

Hedgy.co offers derivative products where the reserve capital is always locked in the blockchain. There is no possibility for default with their product.

Zero technical details, no whitepaper, expensive-flashy-web3.0-website.

SCAM SCAM SCAM.

If you were for real, you'd have a whitepaper with full technical details. Otherwise how is anybody going to independently verify? Isn't that the whole point? Multisig is just one ingredient.

You are right to call us out. We are working on documentation, an API, and an open-source client.

PREACH IT BROTHER!!!!!!!!!!!