- The US government has filed a request to return the money stolen from Bitfinex to the exchange in 2016.
- In the lawsuit, the government claimed there were no victims in the hack after Bitfinex put a recovery plan in place.
The US government has filed a request in court to return the money stolen from Bitfinex to the exchange in 2016. According to the government, these assets would be returned as “restitution in kind.”
The crypto assets in question include approximately 94,000 Bitcoin [BTC] and an unknown amount of Bitcoin cash [BCH]Bitcoin gold [BTG]and Bitcoin Satoshi Vision [BSV].
The government says there are “no victims” in the hack
In the submit On January 14, the US government stated that there was “no victim for the specific conviction offenses in these proceedings.”
This statement stems from the compensation plan that Bitfinex gave to exchange users who lost money in the hack. In this plan, the exchange generalized the losses and each customer had to accept a 36% loss.
The affected customers received their assets in the form of BFX tokens or shares in the parent company. Under this recovery plan, the exchange users were made ‘whole’, leading the US government to claim that there were no victims in this case.
Controversial recovery plan
This compensation plan has sparked controversy due to Bitcoin’s price growth. At the time of the hack, the stolen BTC was worth approximately $72 million. If Bitfinex gets the 94,000 BTC back, these coins will be worth almost $10 billion at Bitcoin’s current price.
In its recent filing, the government stated that any third party can make a claim for these assets through a “side procedure.” However, they would have to prove ownership of these assets, and they would not be considered “victims.”
Bitfinex funds were the largest government seizure
Bitfinex was hacked in 2016 when cybercriminals exploited a bug in the exchange’s multi-signature wallets. The hackers stole 120,000 BTC, of which just over 94,000 BTC was recovered. The US Department of Justice named the recovered funds as the ‘largest financial seizure ever’.
The money was seized following the arrest of Illya Lichtenstein and his wife, Heather Morgan, who had attempted to launder the money.
The two were arrested in 2022 and later found guilty in August 2023. Lichtenstein was sentenced to five years in prison, while Morgan was sentenced to 18 months.
Differences between Bitfinex and Mt.Gox hacks
The Mt.Gox hack remains the largest security breach in crypto history, stealing 740,000 BTC.
However, unlike Bitfinex, Mt.Gox did not formulate a recovery plan shortly after the hack. Instead, the distribution plan will start soon.
According to Arkham IntelligenceMt.Gox owns $3.5 billion worth of Bitcoin. When the repayment plan takes effect, exchange users who have waited nearly 14 years for their money can start selling. This could not bode well for BTC.