Bitfinex Receives Stolen Bitcoin From US Law Enforcement

February 25, 2019 8:45 PM

Cryptocurrency exchange Bitfinex has announced in a post on Medium that a whopping 27.7 of the 119,756 bitcoins stolen in its August 2016 hack have been recovered and returned to the exchange by the US government as a result of efforts by US law enforcement. According to the post, Bitfinex has been in talks with the US government since November 2018, when the exchange was first alerted that the bitcoin funds related to the hack had been obtained.

In June 2015, a year before the hack took place, Bitfinex announced a partnership with digital asset security company BitGo. The partnership brought BitGo’s multi-signature technology to Bitfinex, allowing the exchange to store user deposits online for faster withdrawal times. But the August 2016 security breach resulted in $72 million worth of bitcoin being stolen from user wallets. At the time, BitGo stated there was no evidence that its servers had been breached during the hack.

In today’s Medium post, Bitfinex touches on how the recovered 27.7 bitcoins will be distributed and how it relates back to the exchange’s post-hack distribution of its losses. In 2016, Bitfinex’s recovery strategy was to spread the losses among all users of the platform, rather than just the users who had lost bitcoins. This came to a loss amount of 36.06 percent for each account. As a record of the loss, the exchange then issued US dollar-pegged BFX tokens to each user, which could be redeemed in full by Bitfinex or traded for shares in the exchange’s parent company, iFinex Inc.

Those who decided to trade their BFX tokens for iFinex shares received a tradable Recovery Right Token (RRT), which represented their share in the company. Now, according to the Medium post, Bitfinex is converting the recovered bitcoins into US dollars and those RRT holders will receive “up to 1 dollar per RRT.” Bitfinex explains “the full amount of recovered bitcoins is being distributed pro rata to the RRT holders.”

As for details on the hack itself, the post only briefly touches on the subject, with Bitfinex CEO Giancarlo Devasini stating the exchange is “extend[ing] an open invitation to the hackers, or anyone harbouring information pertaining to the breach, to make contact in whichever medium they feel most secure with, to finally resolve the situation in a mutually beneficial manner.”

Nicholas Ruggieri studied English with an emphasis in creative writing at the University of Nevada, Reno. When he’s not quoting Vines at anyone who’s willing to listen, you’ll find him listening to too many podcasts, reading too many books, and crocheting too many sweaters for his dogs, RT and Peterman.

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