The 27 Bitcoins lost by Bitfinex were recovered by the US government

Editor's note: This article is from cryptonews, author: Sead Fadilpašić, translator: Chaliang

Editor: Lu Xiaoming

According to cryptonews, the U.S. government successfully helped Bitfinex recover about $110,000 worth of Bitcoin and returned it to Bitfinex. Bitfinex has issued a statement confirming the news. Although the recovered Bitcoin is only a small part of the stolen Bitcoin, it is also a rare case of law enforcement agencies successfully recovering stolen cryptocurrencies.

119,756 Bitcoins stolen

On August 3, 2016, 119,756 bitcoins (worth about $73 million at the time) were stolen from Bitfinex. Now, U.S. law enforcement agencies have helped Bitfinex successfully recover 27.66270285 BTC. According to the current price of BTC, the recovered bitcoins are currently worth about $110,000. Bitfinex announced this news in its official announcement. The following is the original announcement:

Bitfinex announced that 27.66270285 bitcoins that were illegally stolen in August 2016 due to a security breach have been returned to Bitfinex thanks to the efforts of US law enforcement. Since the attack in 2016, Bitfinex has cooperated with international law enforcement, provided necessary information and assisted in the investigation. In November 2018, Bitfinex learned that the US government had recovered some of the stolen bitcoins. Currently, Bitfinex has received 27.7 BTC. According to the recovery strategy formulated after the attack, this part of the bitcoins will be converted into US dollars and paid to the "Recovery Right Token (RRT) holders".

However, Bitfinex’s announcement and US law enforcement agencies did not disclose how the bitcoins were recovered. Industry insiders speculated that “the government may be a client of the security company, or the hackers may have left traces when committing the crime.”

Since the 2016 hack, Bitfinex has been working with international law enforcement agencies, providing intelligence and assisting in investigations. Bitfinex received notification in November 2018 that the U.S. government had recovered Bitcoin lost in the 2016 hack of Bitfinex.

Previously, there was almost no chance of recovering stolen bitcoins, and investors could only rely on exchanges to compensate them.

Bitfinex is one of the cryptocurrency exchanges that suffered the most theft. Bitfinex said it would convert the recovered bitcoins into US dollars and distribute them to 5,000 investors who suffered losses from the loss of bitcoins. Bitfinex's legal counsel revealed that law enforcement agencies in the United States and Europe were involved in the investigation of the hacking incident, but did not provide further information or the names of the agencies involved in the investigation.

Compensating investors

After the theft on August 3, 2016, Bitfinex took a unique approach to recording losses for all accounts and credited customer accounts at a ratio of 1 BTX (Bitfinex's platform currency) to 1 US dollar.

Within eight months of the loss, all BFX holders exchanged their tokens at a rate of 1 BTX to 1 USD, or directly exchanged their tokens for shares of iFinex Inc. (Bitfinex is a digital currency trading platform owned and operated by iFinex Inc.). All BFX tokens were destroyed in the process. In addition, Bitfinex created RRT for BFX holders to convert BFX into iFinex shares.

The advantage for RRT holders is that in the event of the retrieval of stolen funds and after the outstanding or unredeemed BFX token holders are compensated, the retrieved funds will be distributed to RRT holders first, up to a ratio of 1 RRT to 1 USD. Since all BFX tokens have been redeemed and destroyed, the current portion of Bitcoin will be distributed to RRT holders in proportion.

Giancarlo Devasini, CFO of Bitfinex, said: “Two years after the Bitfinex theft, we are seeing the efforts of the U.S. government and their proactive response to this matter. We are pleased to be able to compensate investors who lost money and chose to trust us during Bitfinex’s most difficult period. We thank the U.S. federal law enforcement agencies for their tireless efforts to track down and investigate the lost coins and their commitment to recover and return the stolen assets.”

“We will continue to assist law enforcement and communicate with the hacker or anyone who knows about the loss of the coins, using the channels they believe are the most secure to prevent the loss of coins from happening again.”