Bitfinex made a CRITICAL MISTAKE in their accounting policy regarding the upcoming Bitcoin Cash Hard Fork.
In their announcement, they detailed their token distribution methodology as the following:
- All BTC wallet balances will receive BCH
- Margin longs in BTC/USD and margin shorts in XXX/BTC will not receive BCH
- Margin shorts in BTC/USD and margin longs in XXX/BTC will not pay BCH
- BTC Lenders will receive BCH
So, the following is what we will do.
Before the fork:
- Short X amount of BTC on margin; and
- Buy X amount of BTC on wallet and send X amount of BTC to your paper/hard wallet.
Effectively, you hedged your position.
After the fork, your short position of X BTC remains, but your paper/hard wallet contains X amount of BTC and X amount of BCC.
- Move your BTC from paper/hard wallet into Bitfinex, and claim your margin position.
Now you have X amount of free BCC in your paper/hard wallet.
FAQ:
Q. How does this work?
A. It works because your short position of BTC pre-fork will NOT leave you with short positions of BTC and BCC after the fork.
Q. Why do I need to move BTC out of Bitfinex?
A. If your Bitcoin stays in Bitfinex, they will leave you with less than 1 BCC for every BTC.
- i.e. "Due to the net amount of BTC committed in margin positions at the time of the fork, the above methodology may result in Bitfinex seeing a surplus or deficit of BCH. As such, we will be resolving this discrepancy in the form of a socialized distribution coefficient. "