US Law Enforcement Return Part of Funds Stolen In Bitfinex Hack Of 2016

bitfinex crypto exchange

The United States government, through its law enforcement, has returned about 27 bitcoins (BTC), Bitfinex exchange which is part of the funds stolen from the platform in the crypto hack of 2016.

Bitfinex wrote in a blog post:

“Bitfinex are pleased to announce that 27.66270285 BTC that were unlawfully taken in the August 2016 security breach have been received by Bitfinex from the U.S. government as the result of U.S. law enforcement efforts”

The exchange explained that it has been partnering with international law enforcement agencies to provide intelligence and assist with investigations since the hack occurred in 2016. A total of around 120,000 BTC were stolen in the attack.

According to the post, the U.S. government notified Bitfinex last November that it had obtained some part of the stolen funds.

In most cases of crypto heists, it is difficult or almost impossible to retrieve the stolen funds leaving the operators of the exchange to repay affected customers. In the case of Mt Gox, for instance, the exchange is still under pressure to repay customers for one of the biggest crypto hacks which took place in 2014. The exchange is expected to pay out $1billion as compensation to customers and a court in Japan mandated the exchange to undertake a civil rehabilitation process.

How Bitfinex Compensated Affected Users

Bitfinex, however, took the initiative to repay customers that lost funds due to the attack on its platform. The post explains that the exchange issued a temporary Bitfinex token (BFX) in exchange for the dollar value of funds they lost. It went on to redeem the Bitfinex tokens with the dollar at 100cents to a dollar within a period of eight months, after which it all BFX tokens were destroyed. The exchange also allowed customers to exchange for a stake in iFinex, the parent organization for Bitfinex. These customers were issued Recovery Right Token (RRT).

These RRT holders, Bitfinex noted will benefit from the returned funds as part of the recovery scheme. “Further to the recovery strategy outlined in the aftermath of the hack, this [bitcoin received] is being converted to USD and paid to RRT (Recovery Right Token) Holders,” Bitfinex explained in the blog post.

How Exchanges Have Fared After Crypto Attacks in the Recent Past

Since Bitfinex in 2016, the cryptocurrency space has seen some other major cyber attacks on major cryptocurrency platforms and massive funds lost. Last year, Coincheck exchange lost about $530 million worth of cryptocurrency in a hack. The exchange resumed operations after it was bought over by Monex group later in the year and announced compensation for affected users.

This year, New Zealand crypto exchange Cryptopia was attacked and reportedly $16 million worth of cryptocurrencies were stolen. Several weeks later, investigations are still ongoing and users are yet to get access to their funds although personnel of the exchange has been allowed to access their physical headquarters which was barred at the beginning of the investigations.

Riccardo Lopp is a writer specializing in Crypto, ethereum and whole blockchain ecosystem. His background is in economics and statistics.


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