- The U.S. government has made a filing seeking to return the funds stolen from Bitfinex in 2016 back to the exchange.
- In the court filing, the government claimed there were no victims in the hack after Bitfinex enacted a recovery plan.
The American authorities have made a court filing aiming to recover the money illegally taken from Bitfinex in 2016 and return it directly to the platform. According to them, this recovery is referred to as “compensation in-kind.
Approximately 94,000 Bitcoins (BTC) along with a yet-to-be-revealed quantity of Bitcoin Cash (BCH), Bitcoin Gold (BTG), and Bitcoin Satoshi Vision (BSV) are among the digital currencies at hand.
Government says there is “no victim” in the hack
In the document submitted on January 14th, the U.S. government declared that “there is no individual who can be identified as a victim for the crimes of conviction in this case.
As a crypto investor, I’ve noticed that when Bitfinex suffered a hack and my funds were affected, they proposed a compensation plan. This plan pooled everyone’s losses together, and as a result, each user, including myself, was expected to bear a 36% reduction in our holdings.
In this recovery scheme, the impacted clients received either BFX tokens or equity in the parent firm as their assets. This arrangement restored everyone who used the exchange to their original state, causing the U.S. administration to claim that no one suffered losses in this case.
Controversial recovery plan
The Bitcoin-based compensation plan has generated debate due to the surge in Bitcoin’s value. At the moment of the theft, the swiped Bitcoins were valued approximately at $72 million. Should Bitfinex recover the 94,000 Bitcoins, these coins would be worth roughly $10 billion at today’s Bitcoin price.
According to their latest report, the government mentioned that anyone outside parties could make a claim on these assets via a supplementary court process. Yet, it’s important to note that these individuals would need to provide evidence showing they own these assets, and they will not be categorized as “victims.
Bitfinex funds were the largest government seizure
In 2016, Bitfinex suffered a hack due to cybercriminals exploiting a flaw in their multi-signature wallet system. These criminals managed to make off with approximately 120,000 Bitcoins, but more than 94,000 BTC were later recovered. This recuperated amount was deemed the “largest financial seizure” by the U.S. Department of Justice up until that point.
The money was confiscated following the detainment of Illya Lichtenstein and his spouse, Heather Morgan, as they had tried to clean their illegally obtained money.
In 2022, the two individuals were taken into custody, and subsequently admitted their guilt in August 2023. Lichtenstein received a sentence of five years imprisonment, whereas Morgan was given a term of 18 months.
Differences between Bitfinex and Mt.Gox hacks
The largest cyber attack on cryptocurrency to date occurred at Mt.Gox, resulting in the theft of approximately 740,000 Bitcoins.
Unlike Bitfinex, who quickly devised a recovery strategy following their hack, Mt.Gox took a different approach and delayed the creation of a recovery plan. Now, they are preparing to implement a distribution plan shortly.
As reported by Arkham Intelligence, Mt.Gox currently holds approximately $3.5 billion in Bitcoin. If the reimbursement plan is initiated, users who have been waiting for their funds for almost 14 years might start selling. This potential influx of Bitcoin on the market could negatively impact BTC.
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2025-01-16 17:37