Bitfinex Recovers $106,000 of Stolen BTC With US Government Help

Bitfinex has recovered 27.7 bitcoin stolen by hackers in August 2016, the company said on Monday. The coins, worth around $106,000 at the time of writing, represent only a small fraction of the total BTC stolen. U.S. federal law enforcement agencies recovered the bitcoin and returned it to the cryptocurrency exchange.

Also read: State Treasurer: Ohio Companies Now Paying Tax in BTC

Recovered BTC to Be Distributed in Cash to Customers

In 2016, Bitfinex hackers made off with 120,000 BTC, valued at about $72 million at the time, in one of the biggest ever thefts from a cryptocurrency exchange.

Bitfinex said in statement that it will return the recovered bitcoin to more than 5,000 victims of the heist in cash. The exchange, the world’s 17th largest, with trading volume of $443 million in the last 24 hours, said it will convert the returned BTC to dollars before distributing the money to its customers.

The exchange detailed how it had worked with unnamed law enforcement agencies from the U.S. and Europe, according to a Reuters report, “to provide intelligence and assist with investigations.” In November, the U.S. government notified the British Virgin Islands-registered Bitfinex of the recovery of the stolen bitcoin.

Giancarlo Devasini, chief financial officer at Bitfinex, 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 our traders that were loyal to us and believed in us at a very difficult time. We would like to thank U.S. federal law enforcement agencies for their ongoing efforts to investigate the security breach and their commitment to seizing and returning stolen assets.

Bitfinex to Continue to Work With Law Enforcement Agencies

According to U.S.-based cyber security firm Cipher Trace, hackers stole a total $950 million from exchanges and cryptocurrency wallets last year. Japan’s Coincheck has suffered the biggest theft yet, with $530 million worth of the NEM cryptocurrency stolen in January 2018. Hackers also pilfered hundreds of millions of dollars from Mt. Gox in 2014, another Japanese trading platform.

The U.S. government recovery and return of a fraction of the Bitfinex coins is thus seen as a positive development in an industry where such recoveries are rare. When BTC is stolen from an exchange, it is often lost forever and exchanges have been reluctant or simply unable to compensate those affected.

In response to the hacks, regulators all around the world have sought to tighten regulation around the trade of cryptocurrencies. Know-your-customer rules and anti-money laundering regulations have or are in the process of becoming compulsory at exchanges from Japan to the U.S. and from Spain to South Africa.

After the 2016 hack, Bitfinex spread losses across all its customer accounts, which meant a loss of about a third of each customer’s assets held on the exchange. In compensation, the exchange offered users a credit token called BFX, which was equivalent to every dollar lost.

After eight months, customers had redeemed those tokens for cash or shares in iFinex Inc, Bitfinex’s parent company. Users who opted for equity received additional tokens, giving them the right to receive any funds recovered from the hack. Speaking to Reuters, a lawyer representing Bitfinex said the exchange “would continue to work with law enforcement agencies to recover the remaining bitcoin.”

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