URGENT, URGENT, URGENT - Vircurex announcement

I logged onto Vircurex, and found the below announcement. Although the announcement says they will be freezing accounts from 24 March (tomorrow), when I tried to withdraw my 1.4 bitcoin, it gave an error message, implying (wrongly) that I had made a mistake - so the freeze is already in effect

I converted my bitcoin to peercoin (this was ten minutes ago, 4.30pm UK time) - it worked

I then withdraw half my 300 PPC to the Vault of Satoshi, and the other half to my peercoin client - this appears to have worked too, as they show an incoming transaction

So, if any of you have BTC, litecoin, etc. on Vircurex, and want to get out, convert to PPC - but I suggest you act asap


Frozen Funds

In preparation of the following, we have with immediate effect stopped
the possibilities to withdraw BTC, LTC, FTC and TRC. All incoming
deposits will also not be credited to the users accounts for the time

On 24th March 2014 we will be freezing the current BTC, LTC, TRC and
FTC accounts, then perform the below distribution of the available
coins and reenable deposits and withdrawals. This action will also
require us to delete all open sell orders for BTC, LTC, FTC and TRC.

As you may very well be aware, we had two incidents last year that
lead to a loss of a significant number of BTC, LTC, FTC, TRC. We had
communicated at that time that we will be covering those losses from
our income, which we have done so far. We had enough coin balances in
our cold wallet to upkeep our platform and the positive cashflow
enabled us to gradually refill the wallets.

Unfortunately we had large fund withdrawals in the last weeks which
have lead to a complete depletion of our cold wallet balance and we
are now facing the option of either closing the site with significant
unrecoverable losses for all or to work out a solution that allows the
exchange to continue to operate and gradually pay back the losses.

We have obviously chosen the later and hence are going to do the following:

  1. We will introduce an additional balance type called “Frozen Funds”.
    Funds in this balance type cannot be used to trade or withdraw. Those
    are the balances that the exchange will gradually pay back and hence
    transfer back to the available balance over time.
  2. We will move all current balances for BTC, LTC, TRC and FTC to the
    “Frozen Balance”, i.e. your balance will be set to 0.
  3. We’ll take the current available cold storage balance and
    distribute it based on the below described distribution logic.
  4. Monthly we will take the net profit of the exhchange and credit
    back that amount distributed to the users based on the described
    distribution logic.

The freezing of the balances is a one-time action, it does not affect
future deposits in any ways.

Distribution logic

50% of the amount will be distributed top down and the other 50% will
be distributed bottom up.

Top down means: credit the amount from the largest account balance
down to the smaller accounts Bottom up: credit the amount from the
smallest account balance to the larger accounts.


User 1: 5 BTC
User 2: 4 BTC
User 3: 3 BTC
User 4: 3 BTC
User 5: 3 BTC
User 6: 3 BTC
User 7: 1 BTC

Amount to distribute: 12 BTC:
Step 1: Top down distribute 6 BTC:

User 1: Credit 5 BTC
User 2: Credit 1 BTC, remaining frozen balance = 3 BTC

Step 2: Bottom up distribute 6 BTC:

User 7: Credit 1 BTC
User 6: Credit 3 BTC
User 5: Credit 2 BTC, remaining frozen balance = 1 BTC

This approach has the advantages that

all users will eventually receive their funds, though the timeframe
depends on the monthly volume available
new deposits and users are not penalized, thus supporting the ongoing
operations of the platform
fund withdrawals from the available funds are guaranteed, no surprises
or unecessary delays

We believe that this is the best way forward and hope for your support
and understanding.

Thanks for the Headsup… too bad I have some BTC there. Does anybody have an idea how to get it out without massive loss? the price for all non frozen coins went up a lot…

I suggest that it is better to take a 10% reduction in the current price, then have the total frozen for an indeterminate amount of time

As of an hour ago, withdrawals via primecoin/xpm worked as well

Thats true, but it is already 20 percent or more :-\

It hurts, but i guess it is the best way

In fact 30% loss compared to btc-e prices is the best i found :-\

Interesting, how come PPC survive the theft? Maybe it’s the same malleability issue?

Vircurex has been working fine in the past. It is among the better exchanges in my experiences. The announcement says that the action is to allow future profit to pay back one-time theft loss happened before. I am not moving my BTC out and will keep trading there.

Smart move RobertLloyd. And, thanks for the heads up.

@Muto. Getting any percentage is better than a total Loss. It is impossible to tell at this time how much loss may ultimately result.

It is interesting how PPC and XPM were exempted from the freeze. Why?

Another bad news event for Bitcoin and by association all cryptos. A reasonable expectation would probably be a lower Bitcoin price and other cryptos too.

The markets are responding to this. Peercoin and Primecoin up over 10% at time of writing. Bitcoin and Litecoin slightly down. Interesting.

That is realtively simple to explain.

Everyone who had BTC/LTC/FTC/TRC on the exchange and wanted to get the coins out tried to sell those (price goes down) and buyed other Coins (like PPC/NMC etc. - price goes up). Please note that only withdrawel for BTC/LTC/FTC/TRC was halted.

The deed is done. Several hundred BTC accounts are affected. I sort of blinked in the end and traded my BTC to USD. USD can’t be withdrawn from vircurex. I will buy back BTC when the rate is good. My PPCs on vircurex are in my wallet now. I am leaving my XPMs there.