U.S. Court Rules in Favor of Bitfinex for Bitcoin Recovery After 2016 Hack

A federal court has ordered the return of 94,643 Bitcoin, seized after the 2016 Bitfinex hack, back to the exchange.

This decision stems from voluntary restitution agreements tied to plea deals with the convicted hackers, Heather Morgan and Ilya Lichtenstein.

The court ruled that Bitfinex is the primary victim of the hack, excluding its users from being classified as “victims” under U.S. law. Both convicted individuals and iFinex, Bitfinex’s parent company, acknowledged this in prior agreements. The seized Bitcoin will now be transferred to the exchange, with laundered funds facing separate forfeiture processes.

To address user losses from the hack, Bitfinex plans to redeem Recovery Right Tokens issued to affected customers. Additionally, 80% of recovered funds will go toward buying back and burning UNUS SED LEO tokens, a debt token created post-hack. This buyback program is expected to take 18 months and has already triggered a 4% rise in LEO token prices.

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While a large portion of the stolen Bitcoin is being recovered, around 25,000 BTC remains tied to advanced laundering methods like peel chains and mixers. These funds are subject to separate forfeiture procedures due to the difficulty of linking them directly to the original theft.

Morgan and Lichtenstein received sentences of 18 months and five years, respectively, for their roles in laundering the stolen funds. The ruling sets an important precedent in recognizing crypto property rights and may influence future cases, such as those involving FTX customer funds.

Alexander Stefanov

With over 8 years of experience in the cryptocurrency and blockchain industry, Alexander is a seasoned content creator and market analyst dedicated to making digital assets more accessible and understandable. He specializes in breaking down complex crypto trends, analyzing market movements, and producing insightful content aimed at educating both newcomers and seasoned investors. Alexander has built a reputation for delivering timely and accurate analysis, while keeping a close eye on regulatory developments, emerging technologies, and macroeconomic trends that shape the future of digital finance. His work is rooted in a passion for innovation and a firm belief that widespread education is key to accelerating global crypto adoption.