For victims of a cyberattack in 2016 that stole around $70 million from users’ accounts on the Bitfinex trading platform, the Justice Department’s announcement that it had seized billions in stolen bitcoin seemed like excellent news.
According to Frankie Cavazos, who lost 15 bitcoins in the hack, it was the biggest relief of his life.
The worth of the stolen cryptocurrency has soared over the past six years. One bitcoin was only worth a few hundred dollars at the time of the breach. It would trade today for about $20,000.
It would be “a life-changing sum of money” for Cavazos to receive his bitcoins back.
However, thousands of victims just like him haven’t yet had the happy conclusion they had hoped for. Instead, they’re engaged in a court dispute over who is the rightful owner of all that taken cryptocurrency.
Bitfinex openly argued that the looted bitcoins must be delivered to the platform on the day that news of the funds’ recovery surfaced, saying in a statement: “Bitfinex will cooperate with the DOJ and follow relevant legal processes to demonstrate our rights to a return of the stolen bitcoin.”
This is because the business feels that by giving its consumers a range of digital tokens that they may later sell for cash, it has already made them whole. According to a business representative, Bitfinex users could have sold the tokens for money at the time and utilized the money to purchase more bitcoins.
After deciding to allocate 36% of its losses across all account holders, the corporation opted to issue customers tokens as compensation. This meant that everyone who had a Bitfinex account, not just those whose accounts had been compromised, lost 36% of their holdings.
A BFX token was the name of the first token the company produced. One BFX token was given to customers for every dollar they lost.
Cavazos claimed that he thought Bitfinex had “dumped” those tokens on its consumers and that he had not been given the choice to reject the BFX token.
Customers complained about the fact that their tokens were only worth pennies on the dollar when they decided to sell them.
They set them at $1 for each BFX token explained Cavazos. They sold them on the open market and the price dropped from $1 to, say, 20 cents, allowing them to practically FOMO everyone out of debt.
Rafal Bielenia, who was using the platform and had 91 bitcoins, said: When those tokens became accessible, he sold them as quickly as he could. And he could only get around 25% of what they were worth. He thinks, There was never a moment when they gave him a return, neither in dollars nor in bitcoin.
Customers who didn’t sell the tokens right away were eventually given the opportunity by the firm to do so by creating other tokens named RRT and LEO, which they could then use to exchange their BFX tokens for equity shares of iFinex, the corporation that runs Bitfinex.
Simply said, Bitfinex believes that clients have already received a fair compensation and that it was their decision to sell the tokens before they reached a value of $1. After all RRTs have been redeemed, Bitfinex has promised to use 80% of the proceeds from the sale of the bitcoins seized from the 2016 security breach to buy back and burn LEO tokens.
In essence, Bitfinex wants the stolen bitcoins from the 2016 incident to be returned to the firm, and it will give some of its customers a share of that money in cash rather than bitcoins.
However, some of the hacking victims continue to insist that the bitcoins are theirs. Furthermore, it is improbable that they could lost their bitcoins twice.
Why would anyone doubt that she ought to receive my money back? That belonged to her, said Bielenia.
He still think these 15 bitcoins are his, so he is going to keep trying to get his hands on them, Cavazos stated. He can demonstrate that using blockchain explorers.
Will Hogarth, another victim of the Bitfinex breach who had his cryptocurrency taken, said, he still anticipate his bitcoin back and he don’t see any reason why they would keep it.
Victims, individuals and companies whose money, who claimed it’s their money, who claimed that they were victimised by this money laundering operation will file claims ultimately to a court who will decide how that money is distributed, said U.S. Deputy Attorney General Lisa Monaco to CNBC. However, no additional information regarding that procedure has been made public.
The delay at the moment appears to be the fact that the court case involving the couple who, according to detectives, were found with the stolen cryptocurrency has not yet been resolved. Ilya Lichtenstein and Heather Morgan are accused of planning to launder billions of dollars’ worth of bitcoin.
The Crocodile of Wall Street is how Morgan, an aspiring rapper, referred to herself, and Lichtenstein, a self-proclaimed tech entrepreneur, explorer, and part-time magician, identified themselves. If the two are found guilty, they may spend more than two decades in jail. They haven’t yet admitted guilt. No one has been charged with initially hacking Bitfinex as of yet.
An enormous legal fight over what happens to the money is looming as their case moves through the courts.
“Whoever ends up with this money is going to have to battle for it in the end. Anyone who claims there is a clear solution is lying for their personal gain, regardless of whether the government gets to keep it, Bitfinex gets to keep it, or the customers get their money back “David Silver, a cryptocurrency lawyer, said.
Silver predicts that “people are going to pay hundreds of millions of dollars to get their hands on that pot of gold” since there are billions of dollars at stake.
Cavazos concurred, he absolutely think there’s going to be a fight.
They don’t yet know how this story will end, he remarked. However, you cannot simply abandon a hack like this. When the other shoe drops, it’s going to be incredibly intriguing and have an effect on who gets the money because someone who is caught up in this needs to tell the truth.
