Bitfinex Hack: U.S. Orders Return of $4 Billion in Bitcoin to Crypto Exchange
The U.S. government has filed a court document requesting the return of over 94,000 bitcoins stolen during the 2016 Bitfinex hack. The stolen cryptocurrency, valued at the time of the theft at approximately $71 million, is sought to be returned to the Bitfinex exchange by the convicted hackers, Ilya Lichtenstein and Heather Morgan.
In the filing submitted this week to the U.S. District Court for the District of Columbia, the government stated, “For the foregoing reasons, there is no ‘victim’ for the specific offenses of conviction in this proceeding.” Instead, it proposed that the court order voluntary restitution as outlined in the defendants’ plea agreements. This restitution would involve returning all assets seized from the Bitfinex Hack Wallet to Bitfinex in their original form.
This development aligns with an October court filing where both Lichtenstein and Morgan, along with Bitfinex’s parent company iFinex, acknowledged Bitfinex as the sole victim of the hack. The two individuals pleaded guilty in August 2023 to charges of money laundering conspiracy related to the 2016 breach. Their actions involved the laundering of 119,754 bitcoins, which had escalated in value to nearly $4 billion by the time of the 2022 seizure—a record for the Department of Justice.
Bitfinex has announced plans to utilize the recovered bitcoins by selling 80% of the net funds over an 18-month period. The proceeds will be used to repurchase and permanently remove UNUS SED LEO tokens from circulation, a debt token issued by the exchange post-hack to compensate affected customers. This strategic move aims to stabilize the token’s value, which has seen a recent increase of nearly 4%.
Heather Morgan, also known by her stage name “Razzlekhan,” was apprehended alongside Lichtenstein last year. Prior to her arrest, Morgan provided guidance on cybersecurity measures and techniques for social engineering, highlighting a complex background in both legitimate and illicit activities. Lichtenstein has been sentenced to five years in prison, while Morgan received an 18-month sentence in November.
The ongoing efforts to recover and restitute the stolen bitcoins underscore the U.S. government’s commitment to addressing cybercrimes and supporting affected financial institutions. The case also emphasizes the significant impact of cryptocurrency-related offenses on both victims and the broader financial ecosystem.