$9 Billion BTC Return to Bitfinex Sparks Major Controversy

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In January 2025, a U.S. federal court decision mandated that Bitfinex, identified as the only victim of the 2016 hack, should receive approximately 80% (94,643 out of 119,754) of the Bitcoin stolen during that incident back from the perpetrators.

2022 saw the Department of Justice seizing approximately 80% (94,643 out of 119,754) of the bitcoins linked to a hack, setting a path for returning these funds. The Department is currently engaged in recovering the remaining stolen bitcoins, which had previously undergone attempts at money laundering.

Prior to the hack, the value of the stolen bitcoins was approximately $72 million. After a price drop, the worth of these coins dropped to around $58 million. By January 19, 2025, the estimated value of 94,600 BTC is about $9 billion. The number of stolen assets exceeded more than half of the bitcoins Bitfinex had at that moment in time.

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The details of the ruling

The decision could spark debate since all Bitfinex clients who had funds on the platform in 2016 were impacted, irrespective of whether their digital wallets were drained due to criminal activities or not. The unusual aspect is that affected funds came from accounts that were partially emptied by Bitfinex itself, rather than external parties.

The system reduced each deposit by 36.06%, offering compensation in the form of BFX tokens or Parent Company iFinex’s Right to Recovery Tokens instead. These tokens can either be exchanged for cash or transformed into shares of iFinex stock.

Leaving aside the moral dilemma related to reducing client deposits by one-third, it’s worth noting that the compensation offered in 2016 was not equitable given the significant decrease in Bitcoin’s value that resulted from the hack.

Despite the recent decision, there remains an opening for the impacted Bitfinex clients to pursue their share of the compensation individually, with the deadline extending up to January 28.

As per the ruling of the judge, neither the exchange nor its users matched the definition of a victim. Yet, due to the negotiated plea agreements, a voluntary reparation was made possible.

The people behind the hack and money laundering

The individuals behind the plea are Ilya Lichtenstein and his wife Heather Morgan, who are often referred to as “Bitcoin Bonnie and Clyde” due to their infamous crypto heist. Unlike the original Bonnie and Clyde from the 1930s, this modern-day duo has proven to be more intriguing and captivating in the eyes of the media, leaving a lasting impression on pop culture.

Despite maintaining a low profile as an IT entrepreneur, Lichtenstein stayed out of the limelight. On the other hand, Morgan was well-known for her writing contributions to Inc. and Forbes, but she gained even more attention when she was arrested. From that point on, she adopted the Razzlekhan persona, a rapper known for being as eccentric as Bjork. Her latest video was released on January 10, 2025, adding a touch of surrealism to an already intriguing scenario.

We should not undervalue Lichtenstein’s mystery or the clever tactics used for hacking Bitfinex and laundering the stolen funds. The activities of both Lichtenstein and Morgan have garnered attention, as they are being featured in an upcoming Netflix documentary series.

As a crypto investor, I’ve been following the news about Ilya Lichtenstein and his legal troubles. It was revealed that both him and his partner Morgan were implicated in money laundering activities. However, it was just Lichtenstein who confessed to hacking Bitfinex. He received a sentence of five years in prison, while his wife is looking at three years behind bars. On December 19, 2024, a video from the prison emerged on his X account, where Ilya expressed remorse for the hack and apologized for his past actions. In this video, Lichtenstein took full responsibility for the heist, stating that his wife had no knowledge of the hack. He also mentioned his intention to return all the stolen funds.

I have something to say#FreeRazzlekhan

— Ilya Lichtenstein (@unrealdutch) December 19, 2024

Lichtenstein and Morgan confessed to their part in money laundering, with Lichtenstein also admitting to hacking Bitfinex. The former received a five-year sentence, while his wife is looking at three years in prison. On December 19, 2024, a video of Lichtenstein expressing remorse for the hack and expressing regret over past actions was shared on his X account. In this video, Ilya accepted full responsibility for the heist, stating that his wife was unaware of the hack. He also indicated his willingness to return all stolen funds.

Is the ruling controversial?

Multiple perspectives can be considered when evaluating if the recent decision was seen as a triumph or a setback by the cryptocurrency community.

Individuals who are against the U.S. selling any bitcoins might find this decision problematic because, as stated, the funds seized by the DOJ will instead be sent to a company based in Taiwan and the British Virgin Islands. However, even if the government intends to acquire one million bitcoins, holding on to 94,643 bitcoins won’t significantly hinder their progress towards that goal. Regardless, it’s not exactly favorable news.

Should be returned in kind to the users as well since they all took a haircut due to this hack.

— Mike (@immortalbitcoin) January 15, 2025

People who think the misappropriated money should go back to the affected customers find the decision unjustified. The short deadline for claiming a piece of the restitution (by January 28) appears challenging. In summary, having this chance is beneficial nonetheless.

In summary, those who favor Bitfinex over the DOJ can rejoice, as the coins held by the government are set to be returned to Bitfinex. The affected parties can expect to regain most of their original balance. This return of funds is likely to re-enter the market, potentially enhancing trading opportunities for clients and aiding in the recovery of their funds.

In summary, those who favor Bitfinex can rejoice as the coins previously seized by the DOJ are set to be returned to Bitfinex. The affected users will regain a significant portion of their original balance. This return of funds is expected to re-enter the market, potentially enhancing opportunities for Bitfinex in its efforts to recover client funds.

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2025-01-19 10:10