2016 Crypto Hack: Bitfinex Gets $312K in Latest Recovery from US

Thursday, 06/07/2023 | 21:52 GMT by Solomon Oladipupo

BTCs stolen from the hack are currently worth $3.7 billion.

OCCRP recently said Bitfinex hid a report that flagged its security flaws for the hack.

Bitfinex, the cryptocurrency exchange where hackers stole over 119,000 bitcoins (BTC) in August 2016, has retrieved about $315,000 in cash and cryptocurrencies in its latest recovery effort. The BTC stolen from the exchange, worth about $71 million then, is currently priced at approximately $3.7 billion.

Bitfinex Announces New Recovery

Bitfinex announced the latest recovery today (Thursday) in a statement on its website, noting that it obtained the cash and digital asset from the United States Department of Homeland Security (DHS). The cryptocurrencies were seized by the US Customers and Border Protection, an enforcement agency of the DHS.

Previously, Bitfinex retrieved little amounts of the stolen bitcoins. In 2021, the firm in collaboration with the crypto exchange, Poloniex obtained 6.5 BTC worth $305,000 at the time. Earlier in February 2019, Bitfinex reclaimed 28 BTC worth over $107,000 from the US government.

However, the latest recovery follows the earlier seizure of about 94,000 BTC worth $3.6 billion by the US Department of Justice in February last year. US prosecutors seized the digital currencies after arresting and charging a couple, Ilya Lichtenstein and Heather Morgan, for allegedly trying to launder roughly $4.5 billion in cryptocurrency linked to the hack.

Insufficient Recovery

According to Bitfinex, the newly recovered amount will be distributed to holders of the Recovery Right Tokens (RRTs), which is a digital currency that was issued to indebted users after the hack. However, there are currently 30 million RRTs in circulation, meaning that the amount recovered is not sufficient.

“Pursuant to Bitfinex’s contractual commitments, all RRT holders must be redeemed at $1, following which up to 80 per cent of any remaining recovered assets will be paid to UNUS SED LEO token holders,” Bitfinex explained. “RRT holders will have their tokens redeemed pro rata by today, based on the size of their RRT holdings on July 6, 2023, at 12:00.01 am UTC.”

Who Is Responsible for the Hack?

Meanwhile, the Organized Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists, recently reported that Bitfinex never made public a confidential report that found its security lapses responsible for the 2016 hack. OCCRP said the crypto exchange failed to execute operational, financial and technological controls recommended by its digital security partner, Bitgo.

However, Finance Magnates reported that Bitfinex in its response said the “assertions made by the OCCRP are factually incorrect.” OCCPR quoted Bitfinex as saying there was “evidence of negligence…on the part of other counterparties that led to the hack.”