Cryptocurrency exchange Bitfinex announced on Feb. 25 via a blog post that the U.S. government has handed over 27 BTC believed to be the proceeds of a hack in which the exchange lost almost 120,000 Bitcoins in a security breach in August 2016.
The recovered funds will be used to compensate those affected by the hack.
The U.S Government Acts in Good Faith
Part of the announcement reads:
“Bitfinex are pleased to announce that 27.66270285 BTC that were unlawfully taken in the August 2016 security breach have been received by Bitfinex from the U.S. government as the result of U.S. law enforcement efforts.”
The exchange has been collaborating with international law enforcement agencies as it provided intelligence and helped with the on-going investigations.
Bitfinex was informed in November last year that the U.S. government was in possession of Bitcoins believed to have been retrieved from the 2016 Bitfinex hack.
Bitfinex suffered a security breach in 2016 which was first reported on Aug. 2. The exchange lost 119,756 Bitcoins, valued at almost $73 million at the time. The hack caused Bitcoin’s price to plunge by 20 percent.
The unfortunate hack came at a time when the exchange was recovering from a smaller 2015 hack (in which 1,500 Bitcoins were stolen), and the wider cryptocurrency industry was still coming to terms with the Mt. Gox 2014 hack.
The recovered funds represent a mere 0.023 percent of the loot taken in the hack. However, this is a significant step in the right direction.
Bitfinex Hack Recovery Plan
In the aftermath of the hack, the exchange took a unique approach and credited user accounts with BFX tokens at a ratio of 1:1 to a dollar lost.
Eight months after the hack, all BFX token holders had redeemed their tokens for USD or converted them directly or indirectly to shares of the capital stock of iFinex Inc.
The BFX tokens were destroyed in the process, and the tradable Recovery Right Token (RRT) was issued to BFX holders who had converted the BFX tokens into iFinex shares.
The recovered 27 BTC will be converted into USD and used to pay RRT token holders. The RRT tokens are beneficial to holders because all recovered funds will be paid out to them since all BFX token holders have been reimbursed.
Giancarlo Devasini, the exchange’s chief financial officer, believes that the latest developments are an indication that the U.S. government has responded well to the hack in a bid to recover the lost funds.
“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.”
Devasini expressed gratitude to the U.S. federal law enforcement agencies for their commitment to investigating the breach and returning the stolen digital assets.
Devasini called on anyone with information about the hack to come forward so that the matter can be resolved in a “mutually beneficial manner.”