This is a Netflix script written by myself. A story so strange, it stuns the crypto community; An industry accustomed to apparent suicides in Spanish prison cells and irreplaceable token auctions for dead rappers.
The conspiracy involved the United States Department of Justice (DOJ), a crypto exchange with a checkered history, a rapper-cum-Forbes magazine writer, a voucher to buy a new PlayStation, an occasional sorcerer, and $4 billion in bitcoin (BTC). is included. ,
Alleged Bitfinex hack money launderers have kept the internet excited ever since a larger-than-life story emerged last week. It’s no surprise that Netflix has actually announced that they will be bringing the story to life.
In short, a zany rapper who advises companies on social engineering and deals with cybercriminals named Heather Morgan and her cybersecurity expert husband Ilya Lichtenstein was caught trying to launder money stolen from the 2016 Bitfinex hack. The money was laundered through the purchase of game consoles, Uber rides and other gift vouchers.
Despite their drab credentials, law enforcement gained access to the couple’s private keys through a cloud storage account, the DOJ reports. Yes, he kept his private keys in the cloud for upwards of $3 billion in bitcoin.
But, with so many unanswered questions and bizarre circumstances, news of Bitfinex billions has left Twitter scrambling for pieces of the puzzle while armchair investigators have their work cut out for them, coming up with even more bizarre theories. Is.
Between wild theories and some questionable reporting, this article intends to present the established facts surrounding the Bitfinex hack and what it means now that the DoJ now holds 90,000 bitcoins.
bitfinex hack 2016
Hong Kong-based cryptocurrency exchange Bitfinex was hacked six years ago for $70 million. The attack was swift: in just two bitcoin blocks spread over about 20 minutes, Bitfinex wallets in Bitgo’s custody were drained of all their funds. In total, the thieves stole 120,000 bitcoins, which are now worth over $4 billion.
As one of the biggest hacks in the history of bitcoin, the hack caused a sharp selloff and the price per bitcoin fell to around $500. It is important to note that while the money laundering couple, Morgan and Lichtenstein, are not accused of hacking the exchange, the hackers are still at large.
The Bitfinex team worked tirelessly in response to the hack, creating an innovative solution to restore investor confidence. Initially, Bitfinex coined and issued the BFX token and the “Recovery Rights Token” (RRT). While tokenization is common in 2022, in 2016-17, prior to the initial coin offering craze, token issuance was radical.
The token acts as an IOU for clients affected by the hack and can be redeemed for cash or exchanged for iFinex Capital stock (iFinex is the parent company of Bitfinex).
Designed in such a way that Bitfinex can later buy back tokens from users or offer shares in the platform to compensate, the BFX and RRT solutions keep Bitfinex liquid and potentially “give investors a comparison of traditional proceedings.” compensated expeditiously.”
As of April 2017, Bitfinex has recovered enough funds to cover or reimburse all users affected by the hack eight months earlier. Eric Voorhees called the recapitalization “f*cking amazing”, with bitcoin podcaster Peter McCormack describing the process as a “socialization of loss”.
The hack and subsequent quasi-fund recovery is in stark contrast to the infamous Mt Gox hack of 2014, as Mt Gox creditors exchanges are now only discussing refund plans.
health benefit
Fast forward five years, and while some of the Bitfinex bitcoins have been moved several times and have been effectively laundered over time, law enforcement and blockchain enthusiasts viewed the wallet as a hawk.
Given the transparency of the bitcoin blockchain, the hacked coins were blacklisted from crypto exchanges, meaning that money laundering would prove difficult.
90,000 bitcoins, about $3.6 billion, moved in early February. The DoJ was behind the move and the protagonists, Morgan and Lichtenstein, came into the limelight. The DOJ’s statement explained that:
“Special agents accessed files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that received the stolen funds directly from Bitfinex, and the Special Agents from Bitfinex. Allows the seizure and recovery of more than 94,000 stolen bitcoins legally.
As a result, the DoJ now holds 94,000 bitcoins. The consequences of the US receiving so much bitcoin due to a potential bitcoin price crash are wide-reaching for questions related to when the funds will be returned, and where.
leo token
This is where the Netflix saga takes a breather and the speculations are put to rest. The recovered bitcoin remains in a wallet, and the token UNUS SED LEO (LEO) is moonlighted when the money-laundering test is resolved, while commentators theorize on the stolen bitcoin.
As a small piece of the Bitfinex puzzle, but a large part of the wider Bitfinex saga picture, the LEO token is another example of financial ingenuity. In 2019, Bitfinex’s parent company iFinex listed LEO as an exchange utility token.
The token offered lower fees to merchants and solved problems related to iFinex’s payment processors. Importantly, the token’s 2019 white paper states:
“An amount equal to at least 80% of the net funds recovered from the Bitfinex hack will be used to repurchase and burn outstanding LEO tokens within 18 months from the date of recovery.”
In a bulletin issued last week, Bitfinex backed up the white paper’s claim, saying “Bitfinex will, within 18 months from the date of receipt of the recovery, repurchase and burn the outstanding UNUS SED equivalent to 80% of the net funds recovered.” Will use the Zodiac. Leo token.”
Indeed, traders are banking on these funds returning to Bitfinex. The LEO token is up, hitting new highs and jumping over 50%.
Still, while Bitfinex may be confident of recovering the hacked bitcoins, the DOJ has not disclosed the next steps.
DoJ is a hodler now?
As noted, the stolen bitcoins remain in the wallet of the Department of Justice. The blockchain wallet address holds 94,632 bitcoins, with the last deposit received on 11 February.
A wallet containing more than 94,000 bitcoins in 2022 is enough: Microstrategy holds 125,000 bitcoins and Tesla holds 43,200. We can only assume that the DoJ has a better opsec than the alleged money-launderers and will not store the keys in the cloud.
bitcoin treasury twitter jokingly said That they would add it to their list of bitcoin treasuries, meaning the United States would become the holder of the recovered funds.
Binance CEO Changpeng Zhao Asked“If they [Bitfinex] To get the BTC back, how should they split it with the LEO holder, or with those who took a loss (and then sold the LEO) for accepting LEO at the time of the hack?”
There was no time to research it in detail. 2 honest questions.
Did Bitfinex lose or make money from the hack?
If they get the BTC back, how should they split it with LEO holders, or with those who took a loss (and then sold off LEO) for accepting LEO at the time of the hack?
— CZ Binance (@cz_binance) 8 February 2022
In an interview on the WAGMI podcast, Bitfinex’s chief technology officer, Paolo Ardoino, reassured receiving the funds. He added that they are “actively working on returning them (money) safely,” adding that this could take some time.
Ardoino stressed the importance of “giving back to the community” and reiterated once again that Bitfinex will use 80% of the funds to buy back LEO – but it is unlikely to be a “buy in the market”.
David Silver, a securities fraud and investment loss attorney said That “Bitfinex is going to fight like hell to keep the money for itself.”
Ultimately, however, he said, “the government will not administer the redistribution.” In a boon to privacy, the government could use the opportunity to return the funds to identify the original bitcoin holders and impose taxes as a result.
