Bitfinex to recoup stolen Bitcoin after US restitution mandate

The US government ordered that the 94,000 Bitcoin (BTC) seized in connection with the 2016 Bitfinex hack be returned to the exchange as part of an in-kind restitution process.

The ruling stated that there is no victim for the specific offenses of conviction, resulting in the return of all the assets seized from the “Bitfinex Hack Wallet.” Meanwhile, the remaining seized assets should be subject to the ongoing third-party forfeiture proceedings.

The decision aligns with a US government filing from Oct. 9, 2024, which stated that it only identified Bitfinex as a victim. 

Less than one month later, the Department of Justice (DOJ) sought information on potential victims in addition to the exchange. However, no one came forward, and the government issued the restitution order.

The restitution is related to the plea agreements of Ilya Lichtenstein and Heather Morgan, the couple at the center of the high-profile case. In August 2023, the pair pleaded guilty to conspiring to launder 119,754 BTC, valued at approximately $71 million at the time of the hack. 

In November, Lichtenstein was sentenced to five years in prison, while Morgan received an 18-month sentence for their roles in laundering the stolen crypto from Bitfinex. 

Hack and restitution

In the 2016 breach of Bitfinex, hackers stole nearly 120,000 BTC from the exchange. Consequently, the exchange reduced all user balances by 36% and issued a token called BFX as compensation.

BFX was issued at 1:1 parity with the US dollar, and users could sell, redeem, or exchange it. By April 2017, all BFX tokens had been redeemed.

In July 2023, Bitfinex received $312,219.71 in cash and 6917 Bitcoin Cash (BCH) from the US Department of Homeland Security. The exchange will use the amount to redeem the Recovery Right Tokens (RRT) users hold. 

Additionally, Bitfinex will allocate up to 80% of any remaining assets to UNUS SED LEO (LEO) token holders over 18 months.

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