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U.S. Authorities Recover Bitcoin from 2016 Bitfinex Hack

Reading Time: 2 minutes by on February 26, 2019 Business, Exchange, Finance, News
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Bitfinex has announced that they will be compensating 5,000 victims of its 2016 hack as it was reported by Reuters on February 25, 2019, that US authorities have recovered some of the bitcoin that was stolen during the hack.

Rightful Owners

Bitfinex has scored a small victory this week now that the US government has returned some of the funds that were stolen from the exchange during its 2016 Hack.

The amount recovered was about 28 Bitcoin worth approximately $110,000 and with this, Bitfinex intends to use the funds to compensate about 5,000 customers who were affected by the hack. While the 28 bitcoin is small compared to the almost 120,000 that was stolen during the hack, it is one of the rare cases of stolen crypto being recovered by law enforcement as oftentimes, when crypto is stolen from an exchange, it is often considered to be gone for good and users are often left helpless unless the exchange has the funds to compensate them. At the time the hack took place, the amount of bitcoin stolen was worth $72 million.

Since then, attacks on exchanges haven’t exactly stopped as in 2018, Coincheck suffered a hack leading to the loss of millions of dollars and in 2019, Cryptopia also fell victim to a hack.

As part of their plan to compensate visitors, the exchange has stated that they will convert the bitcoin to dollars and then distribute among 5,000 victims.

To Catch a Crook

While some level of crime is inevitable in the financial world, cryptocurrency-related crime is in a class of its own.

On one hand, because cryptocurrency isn’t physical, the theft of it is usually hard to track down and as mentioned earlier, hacks of exchanges are often considered to be unsolvable. At the same time, the type of cryptocurrency being stolen has an effect. On January 16, 2019, Binance was informed that some of the stolen funds from the Cryptopia hack were discovered on their exchange and they were promptly frozen. This was possible because the coins in question were not privacy coins

There have also been a number of arrests made for SIM swapping, which is another method of stealing cryptocurrency from users. Hopefully, the progress that has been made in the Bitfinex case will signal an increase in the recovery of stolen crypto.

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