The US government today revealed that Bitfinex may be the sole entity eligible for restitution in connection to the infamous 2016 hack, which resulted in the theft of approximately 120,000 BTC.
The Bitfinex hack was one of the largest security breaches in the history of Bitcoin. The hacked coins, valued at around $72 million in August 2016, at the time of the incident, have since surged in value and are now worth a staggering $5.8 billion.
“The government is seeking to notify the public regarding the offenses to which the defendants have pled guilty to permit any person who claims status as a potential crime victim to assert any rights under the Crime Victims’ Rights Act (CVRA), 18 U.S.C. § 3771,” reads the US government filing. “ The government is not aware of any person who qualifies as a victim under the CVRA or for restitution under the MVRA, beyond perhaps Bitfinex, the Victim Virtual Currency Exchange (“VICTIM VCE”).”
In the aftermath of the 2016 hack, Bitfinex moved to mitigate the loss, reducing all customer balances by 36%. The decision drew sharp criticism from parts of the Bitcoin community, however, the exchange followed up by compensating its users through the issuance of BFX tokens.
These tokens allowed customers to sell, redeem, or exchange them, with the option for some to convert their holdings into equity shares in Bitfinex’s parent company, iFinex. By April 2017, all BFX tokens had been redeemed, with Bitfinex claiming that it had fulfilled its financial obligations to its users.
In a monumental breakthrough in February 2022, US authorities seized 94,643 BTC tied to the hack, with Ilya “Dutch” Lichtenstein and his wife Heather “Razzlekhan” Morgan emerging as the main culprits. The couple pleaded guilty to the Bitfinex hack last year and are now facing decades in prison.
At the time of the seizure, this amount was valued at $3.6 billion. Bitfinex has since been working closely with law enforcement to recover the stolen assets and has made notable strides in its recovery efforts. In July 2023, the exchange received $312,219.71 in cash and 6.917 Bitcoin Cash (BCH) from the US Department of Homeland Security as part of these efforts.
“Counsel for the defendants have been consulted about this motion,” reads the filing. “Defendant Ilya Lichtenstein and Defendant Heather Rhiannon Morgan do not oppose the motion and maintain that the only potential victim for CVRA or MVRA purposes, if any, is Bitfinex.”