The ongoing BTC-E exchange situation continues to spark debates among cryptocurrency enthusiasts. In the previous update, the company announced the creation of an IOU token and reduction of customer balances. After getting a lot of community feedback, it appears those plans have been changed once again. It is good to see the company work on new solutions, though.
NEW BTC-E UPDATE OFFERS SOME GOOD NEWS
Ever since the BTC-E exchange platform went offline and the domain was seized by government officials, cryptocurrency users have been asking many questions. The main pressing issue is whether or not customer funds are safe. For now, that is not entirely the case, although the BTC-E team claims they have access to roughly 555% of all customer funds right now. The remaining money has officially been seized by government officials and law enforcement agencies, with no chance of recovering it, by the look of things.This leaves a big financial hole to fill by the company.
In the previous update shared with the world, it appears the BTC-E team would give all users a balance haircut. More specifically, the missing 45% of funds would be deducted from user balances and they would receive an IOU token in return. Every single token would be valued at US$1 and can be redeemed at market rates at any given time, assuming there is enough demand for them. This proposal didn’t sit all too well with the cryptocurrency community, though.
BTC-E received a lot of viable feedback from the community and came u up with a new plan. The goal of the company is to treat all users fairly and ensure the missing funds can be recuperated in one way or another. According to their new plan, there will be a recalculation of all currency balances. This will be done by taking the available assets into account as well. This means 55% of all current balances will be credited as currency immediately, with the remaining 45% left in the form of a specific currency token.
All currencies will get their associated “IOU” token, which can be traded on the exchange free of charge. These tokens will not have a fixed market price, which means there is plenty of room for arbitrage opportunities and recovering some initial losses pretty quickly. However, they will never have more value than their face value, which means the room for financial gain is pretty limited unless you step in at the right time. It is a fair plan, all things considered, and one that makes it clearer to users as to which outstanding balances they have yet to recuperate.
The current plan by BTC-E is to eventually redeem all outstanding tokens, although it is hard to tell how long this process will take. If the Bitfinex IOU situation is to be considered, the process can be settled as quickly as a few months from now. It’s far from an ideal situation, but it guarantees BTC-E users will eventually get their money back in one way or another. It’s good customers get the option to either trade at face value or try to get rid of them below the normal price in an effort to move all funds out of the exchange sooner rather than later.
BTC-E users who had 1 BTC in their account balance will receive 0.55 BTC and 0.45 BTCT in the near future. The actual cryptocurrency funds can be transferred out immediately if the users prefer to take that course of action. Remaining tokens will be available for trade or exchange at face value at a later unspecified date. It is a simple process, yet it remains a bit unclear when users will be able to access their balances. This plan by BTC-E seems pretty solid, to say the least, although it remains to be seen how long it takes to recover all missing funds accordingly.