Originally published on: October 09, 2024
In a recent government filing in the case against hackers Ilya Lichtenstein and Heather Morgan, it was disclosed that Bitfinex may be the only entity eligible for restitution following the 2016 hack that resulted in the loss of 119,756 Bitcoin valued at approximately $60,821.38.
Bitfinex took swift action after the hack by spreading the loss across its customer base and reimbursing them directly. While the government seemed satisfied with these efforts, they are taking additional precautions to ensure all necessary steps are taken to recover losses.
Under the Crime Victims’ Rights Act and the Mandatory Victim Restitution Act, victims of crimes are entitled to full and timely restitution for their losses. In response to the hack, Bitfinex implemented measures to “socialize” the loss by reducing all customer accounts by around 36% and issuing a new token, BFX, to cover customer losses.
BFX holders were given the option to sell the tokens on the market or exchange them for shares of iFinex’s capital stock at a fixed rate. Eventually, all BFX tokens were redeemed, with customers who chose iFinex shares also receiving Recovery Right Tokens to be redeemed in case of funds’ recovery.
The filing also revealed that iFinex has agreed to redeem outstanding Recovery Right Tokens if funds are recovered. Additionally, the government proposed creating a website for potential victims to receive information and self-report if they believe they were affected by the hack.
Following the arrest of Lichtenstein and Morgan in February 2022 and the seizure of cryptocurrency worth $3.6 billion, the Department of Homeland Security seized additional funds connected to the case in July 2023.
Despite the efforts to address the hack’s aftermath, concerns remain about the impact on account holders. Stay informed on the latest developments in crypto laws and regulations by subscribing to the Law Decoded newsletter for valuable insights on navigating the crypto landscape. Subscribe today to make informed decisions for your crypto ventures.
