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Popular cryptocurrency exchange Bitfinex was involved in a serious security breach back in August of 2016 where the hackers were able to get away with about 120,000 BTC before the breach was detected. Bitfinex has received 27.66270285 BTC yesterday, courtesy of the U.S. government. This partial return of the stolen cryptocurrency is the result of the U.S. law enforcement agencies. The returned Bitcoins are destined to be converted to USD and paid to Recovery Right Token Holders.
The infamous hack in the Honk Kong-based crypto exchange took place during the first week of August back in 2016. The hackers managed to transfer 119,756 BTC to private wallets before the attack was detected and Bitfinex suspended cryptocurrency buying activities to prevent further losses. Bitcoin had been going pretty strong during that time and the crypto coin stolen was equivalent to approximately $72 million. According to the company, Bitfinex has been collaborating with many law enforcement agencies and assisting them with their investigations on the incident.
Bitfinex published a blog post with Medium.com on 25th of February in which the company shared the delightful news and showed gratitude for the United States’ law enforcement agencies for their efforts. Chief Financial Officer of the crypto exchange Giancarlo Devasini says that these are the results of the unique and robust response strategy devised by the company as well as the help of the U.S. government.
After thanking the law enforcers for their efforts, the CFO added that Bitfinex will continue to assist them with their investigation wherever possible. Giancarlo Devasini also offered the hackers or the individuals who have information about the security breach to come out, to resolve the matter with a solution that is beneficial for both sides.
Ryan Radloff, CEO of CoinShares, a crypto investments firm, tweeted on the topic saying that the interaction of the crypto exchange with the U.S. government in this manner was interesting to watch. Ryan Radloff said that by being on the receiving end of a transaction involving the U.S. government, Bitfinex has legitimized itself in the eyes of the industry.
Bitfinex’ response strategy for this incident was truly a robust one. The company – instead of going with one of the obvious options available – decided to create a plan that would redeem every single dollar lost during the hack. The first step was to spread the damage across all accounts and minimize the density of lost bitcoins on the affected ones. A special crypto coin BFX (or BFXcoin) was created and credited to the exchange’s customers at a ratio of 1 BFX to 1 dollar lost.
The company acted upon its promise and within eight months of the security breach, every single BFXcoin was redeemed. This special coin was capable of being redeemed in USD form or being exchanged with the shares of the capital stock of iFinex Incorporation. Bitfinex also created the Recovery Right Token and awarded them to BFX holders to further compensate for the inconvenience. RRT holders were to receive the recovered funds at a rate of up to $1 for each token.