Federal court ruling returns $9 billion in bitcoin to Bitfinex following the 2016 hack. Learn more about the restitution process and claim deadline.
Federal Court Decision Marks Major Step Toward Cryptocurrency Restitution
A U.S. federal court has ruled that 94,643 bitcoins, valued at over $9 billion, will be returned to Bitfinex, following a voluntary restitution agreement tied to plea deals with the perpetrators of the infamous 2016 hack. The decision is part of an ongoing effort to recover assets stolen during one of the largest cryptocurrency heists in history.
Bitcoin Recovery from 2016 Hack
In 2016, Bitfinex suffered a major security breach, resulting in the theft of 119,754 bitcoins from user accounts. Ilya Lichtenstein was later identified as the individual responsible for infiltrating Bitfinex’s security systems. In the aftermath, the exchange reduced account balances by 36%, issuing BFX tokens to users as compensation. These tokens could be redeemed for cash or converted into equity in Bitfinex’s parent company, Ifinex.
Legal Proceedings and Plea Deals
The case took a significant turn in 2022 when the U.S. Department of Justice (DOJ) cracked encrypted data and linked Lichtenstein, along with his wife Heather Morgan, to the hack. Both individuals pleaded guilty to money laundering, with Lichtenstein admitting to the hack itself. Their cooperation led to the recovery of approximately 80% of the stolen bitcoin, marking the largest asset seizure in DOJ history.
Voluntary Restitution for Bitfinex
Despite the court’s ruling that Bitfinex and its users do not meet the legal criteria for “victims” under the Mandatory Victims Restitution Act, the judge invoked plea agreements, enabling the voluntary restitution of assets to the exchange. The recovery process will account for the assets explicitly linked to the hack, while other laundered funds will undergo a separate forfeiture process.
Claim Submission Deadline Approaches
Third parties, including Bitfinex users, have until January 28, 2025, to file claims or objections regarding their entitlement to a portion of the recovered assets. The DOJ has set up a mechanism for individuals to identify themselves as affected parties.
Moving Forward
Bitfinex reaffirmed its commitment to redeem the remaining Recovery Right Tokens issued in 2016. These tokens were designed to allocate recovered funds to those impacted by the hack. As the deadline approaches, the resolution of this case could set important legal precedents for future restitution cases in the cryptocurrency world.
Affected Bitfinex users should review the latest updates and file claims by the January 28 deadline.