A recent US government filing indicates that Bitfinex may be the only entity eligible for compensation related to the 2016 hack that resulted in the theft of around 120,000 BTC. Following this news, Bitfinex’s LEO token saw a 14% increase to $6.85.
Bitfinex was hit hard by the cyberattack, which led to a 36% reduction in all customer account balances to cover the losses. To make up for this, the exchange issued BFX tokens to customers, which could be sold, redeemed, or exchanged. By April 2017, all BFX tokens had been redeemed, with some customers choosing to receive shares in Bitfinex’s parent company, iFinex. According to court documents, iFinex believes it is the primary victim of the hack due to sustained financial losses.
Restitution efforts are now expected to focus on Bitfinex rather than individual account holders, as the exchange has already compensated users in various ways. In February 2022, US authorities seized 94,643 BTC linked to the hack, valued at $3.6 billion at the time, which could now be returned to Bitfinex and is currently worth $5.8 billion.
In July 2023, Bitfinex received $312,219.71 in cash and 6.917 Bitcoin Cash (BCH) from the US Department of Homeland Security as part of the ongoing recovery process. The exchange has obligations to token holders, particularly those with Recovery Right Tokens (RRTs) issued after the 2016 incident. Recovered funds will be used to redeem these RRTs, and up to 80% of any remaining assets will be allocated to UNUS SED LEO token holders.
While UNUS SED LEO token holders may not directly receive the recovered Bitcoin, they could benefit indirectly through the token’s burn mechanism and potential increase in value if Bitfinex successfully recovers and utilizes the stolen funds as outlined in their plans.
The determination that Bitfinex is the sole victim eligible for restitution simplifies the legal process by focusing efforts on returning assets to the exchange. The 2016 Bitfinex hack remains one of the largest security breaches in crypto history, impacting the market and raising concerns about exchange security. Bitfinex’s approach to socializing losses and compensating users, despite initial criticism, has allowed the exchange to continue operating and recover from the incident.
As traders react to the news, Bitcoin saw a slight decrease of 0.7%, indicating some nervousness about billions of dollars worth of Bitcoin potentially re-entering circulation. This latest development may bring closure to the long-standing issue of the 2016 hack and pave the way for Bitfinex to recover and move forward.