Bitfinex may be the only victim in $7.4 billion Bitcoin theft: US govt.
Key Takeaways
- Bitfinex may be the only eligible party for restitution from the 2016 Bitcoin hack.
- The exchange compensated users with BFX tokens, all redeemed by April 2017.
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Bitfinex may be the sole entity eligible for restitution from the 2016 Bitcoin hack, where hackers stole approximately 120,000 Bitcoin, worth around $7.4 billion at current prices, according to a legal motion filed by the US Attorney’s Office for the District of Columbia.
The government, however, is unsure if there are other individual victims who may be eligible for victim rights or restitution. Due to the difficulty in identifying all potential victims, they are requesting permission from the court to use alternative methods to notify potential victims of the hack.
“The government is not aware of any person who qualifies as a victim under the CVRA or for restitution under the MVRA, beyond perhaps Bitfinex, the Victim Virtual Currency Exchange,” the filing wrote, “but seeks such relief out of an abundance of caution, in order to provide notice to members of the public—in particular, to former accountholders of the Victim VCE —and to give them an opportunity to advance potential claims for victim rights and/or restitution under the CVRA, Mandatory Victim Restitution Act (MVRA), and related statutes.”
The CVRA grants certain rights to victims of federal crimes, including notification and the opportunity to be heard in court. Victims are also entitled to full and timely restitution as provided by law.
Through the filing, the government is looking to inform any potential victims of the crime and give them an opportunity to assert their rights or seek restitution.
Bitcoin has skyrocketed over 10,000% since the Bitfinex hack
The 2016 Bitfinex hack is one of the largest security exploits in crypto history. At the time of the incident, the stolen Bitcoin was valued at around $71 million. Bitcoin has soared over 10,000% since the hack, now trading at around $62,000, according to CoinGecko data.
The identity of the hackers was not immediately known, but it was later revealed that Ilya Lichtenstein and Heather Rhiannon Morgan were behind the money laundering conspiracy tied to the hack. Lichtenstein admitted being the executor.
Following the hack, Bitfinex controversially reduced all customer account balances by 36% to share the losses. In compensation, the exchange issued BFX tokens to customers, who could then sell, redeem, or exchange them for shares in Bitfinex’s parent company, iFinex. By April 2017, all BFX tokens had been redeemed.
US authorities managed to recover a substantial portion of the stolen Bitcoin. In February 2022, they seized over 94,000 BTC linked to the hack after decrypting files owned by Lichtenstein that contained wallet addresses and private keys associated with the stolen funds.
Further recovery efforts were also successful. Bitfinex said in July 2023 that it received around $312,219 in cash and 6.917 Bitcoin Cash (BCH) from the US Department of Homeland Security.
The exchange plans to use these recovered funds to redeem Recovery Right Tokens (RRTs) issued after the hack, and intends to allocate up to 80% of any remaining assets to holders of its native token, UNUS SED LEO.
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Author: Vivian Nguyen
