Business

Steve Kaaru

Bitfinex receives some of the Bitcoin Core stolen in 2016 hack

The U.S government has returned to Bitfinex some of the Bitcoin Core (BTC) stolen during the 2016 security breach. Bitfinex announced recently that it had received 27.66270285 BTC. The exchange will convert the BTC to USD and pay the proceeds to Recovery Right Token holders.

Bitfinex has been collaborating with international law enforcement agencies in investigations since the 2016 hack, the company revealed. In November last year, it received an alert that the U.S government had retrieved some of the stolen BTC. Four months later, the government returned the 27.7 BTC, worth $106,000 at the current rate.

Following a much-publicized security breach in 2016 in which hackers made away with $65 million, Bitfinex took a unique approach to other exchanges. It generalized the losses across all the accounts on its platform. This meant that all its users lost some portion of their assets. It then issued BFX tokens to the users at a ratio of 1BFX:1USD. Eight months later, the exchange had compensated all the users, either in dollar form or with shares of iFinex Inc, its parent company.

For those users that opted for iFinex shares, the exchange created a tradable Recovery Right Token (RRT). Whenever it recovers any of the stolen tokens, the exchange distributes it among the RRT token holders.

Commenting on the recovery, Bitfinex CFO Giancarlo Devasini stated:

“Over two years following the hack of the Bitfinex platform, today we see the results of a clear and robust response strategy and the efforts of the U.S. government. It gives us great pleasure to be able to reimburse the traders that were loyal to us and believed in us at a very difficult time. […] We will continue to assist law enforcement with their inquiries, and also once again extend an open invitation to the hackers, or anyone harboring 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.”

The recovery of the stolen BTC is a very positive sign for the crypto industry. It is also quite an anomaly as exchanges never recover the stolen tokens. With the rise of crypto tumblers and mixers, hackers are not short of ways to launder the crypto. They then use peer-to-peer crypto trading platforms as they don’t have strict anti-money laundering regulations.

Following the recent Cryptopia hack, a report by blockchain analytics firm Elementus revealed that the hackers had used EtherDelta to cash out most of the tokens. Of the $3.2 million that they had cashed out, $2 million had been on EtherDelta, with Binance and Bibox coming in at a distant second and third place respectively.

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