$314K from 2016 Bitfinex attack returned by US Homeland Security

The digital currency exchange known as Bitfinex said on July 6 that it has been given $312,219.71 in cash together with 6.917 Bitcoin Cash by the United States Department of Homeland Security.

The seizure was carried out with the assistance of the United States Customs and Border Protection Service.

The stolen assets will be refunded to the Bitfinex customers who were affected by the breach in 2016 on a proportional basis.

After holders of Unus Sed Leo (LEO), Bitfinex’s native token, have had their RRTs redeemed with the recovered assets, the remaining funds will be distributed to those who possess Unus Sed Leo.

Bitfinex had a security breach in 2016, which resulted in the loss of Bitcoin belonging to 119,576 clients. These Bitcoin were valued around $70 million at the time but are now worth $3.7 billion.

Ilya Lichtenstein and Heather Morgan, his wife, were taken into custody by the United States Department of Justice on February 8, 2022. The two were reportedly involved in a conspiracy to launder cryptocurrency that was tied to the breach.

Efforts to retrieve the monies are still under progress at this time.


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Top 30 Altcoin Explodes After U.S. Authorities Crack 120,000 Bitcoin (BTC) Theft Case

A top-30 crypto asset by market cap is skyrocketing after the U.S. Department of Justice announced it had seized nearly 80% of Bitcoin (BTC) stolen years ago from the Bitfinex crypto exchange.

UNUS SED LEO (LEO), the utility token of the Bitfinex crypto exchange, is up 43% over the last 24 hours.

At time of writing, LEO is trading at $7.12. The utility token of the Bitfinex crypto exchange currently boasts a market cap of $6.7 billion, ranking it as the 26th–largest crypto asset by valuation.

In a statement announcing the seizure by the US authorities, Bitfinex says that if it receives the seized Bitcoin, it will use 80% of the funds to repurchase LEO tokens before sending them to an inaccessible wallet address.

“If Bitfinex receives a recovery of the stolen Bitcoin, as described in the UNUS SED LEO token white paper, Bitfinex will, within 18 months of the date it receives that recovery use an amount equal to 80% of the recovered net funds to repurchase and burn outstanding UNUS SED LEO tokens.”

According to the U.S. Justice Department, federal authorities seized more than 94,000 Bitcoin directly linked to the August 2016 hacking of Bitfinex. Alongside the seizure, two individuals were arrested in Manhattan, NY, and charged with a conspiracy to launder the billions of dollars worth of Bitcoin.

The seized Bitcoin is currently worth over $3.6 billion. Approximately 119,754 Bitcoin were stolen from Bitfinex in the 2016 security breach. Bitcoin was trading at around $600 in August of 2016, giving the stolen Bitcoin a value of just under $72 million at the time of the theft.

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Bitfinex-backed LEO soars to record high on supply crunch expectations

Unus Sed Leo (LEO) surged by almost 70% on Feb. 9 to reach its record highs as traders assessed the potential of an incoming supply crunch in its market.

The token was issued in 2016 to refinance crypto exchange Bitfinex after it lost about $70 million worth of Bitcoin (BTC) in a hacking incident. In its original whitepaper explaining LEO, Bitfinex had promised that if they could recover the lost funds, they would use 80% of the proceeds to buy back and burn LEO.

Around 80% of stolen Bitcoin recovered

On Feb. 8, the U.S. Department of Justice (DOJ) announced that it last week had seized over $3.6 billion worth of Bitcoin stolen — around 94,000 BTC — from Bitfinex in 2016, valued as per the current bitcoin-to-dollar exchange rates. Overall, Bitfinex had lost 119,754 BTC to the hack, meaning the cryptocurrency tied to the incident was worth around $4.5 billion at the time of DOJ’s seizure.

Bitfinex confirmed its promise to use the recovered funds to buy back and burn LEO tokens in a statement issued Tuesday, noting that the process would complete within 18 months of the date it receives the amount.

DOJ officials told the press that they plan to set up a court process for victims to reclaim their stolen Bitcoin funds.

Nonetheless, they did not disclose how long the process would take to finish. If past is any indication, crypto refunds tied to exchange-related hacks take time. For instance, victims of Mt. Gox’s $460-million hack — from 2013 — are still waiting for their refunds.

But LEO bulls ignored such red flags and went ahead with raising their bids for the token this Tuesday, anticipating that the upcoming supply crunch would make the token more valuable in the long run. As it happened, LEO’s price rose to its all-time high of $8.144, only to follow the upside move with a correction that saw the token going to as low as $7.04 early on Wednesday.

LEO/USD daily price chart. Source: TradingView

Mixed outlook for LEO

Adam Cochran, Partner at activist venture capital firm Cinneamhain Ventures, identified problems with the ongoing LEO price rally, noting that not all the recovered funds would go through Bitfinex unless those holdings belong to the exchange themselves.

“There could, of course, be some weird deal structure in place, with the custom tokens Bitfinex issued, where they essentially claim they bought the loss off of other customers and so the Bitcoin is theirs and they can claim it all, and then later distribute,” the executive tweeted Tuesday, adding that he “personally” won’t be purchasing LEO while expecting a quick buyback from Bitfinex.

Related: Bitfinex hack recovery spurs crypto community responses

Conversely, Alexander Mamasidikov, co-founder of crypto wallet service, MinePlex, called the recovery of Bitfinex funds a “right fundamental” that could back LEO’s growth in the future.

“Native to Bitfinex, LEO has the chance of tagging along with the future ecosystem growth of the trading platform, a move that is billed to guarantee the coin’s continuous uptrend,” said, adding:

“LEO is arguably underpriced when compared to the native tokens of its major competitors. In the mid-term, LEO is poised to touch the $10 resistance point while a quarterly close of $12 is likely should this current growth pace be sustained.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.