Recovered BTC to Reimburse Recovery Right Token Holders
Following the hacking event, Bitfinex launched an investigation with the assistance of enforcement agencies internationally, to trace the 119,756 BTC that vanished from the exchange’s premises. According to the recovery strategy outlined after the incident, Bitfinex generalized the losses from every account and credited a USD-pegged token dubbed BFX in an equivalent amount to the damages each customer suffered. Subsequently, Bitfinex gave its customers the option to either redeem their tokens for cash or exchange their BFX for the shares of iFinex Inc., the company that owns and operates Bitfinex.
It gives us great pleasure to report we have received bitcoins from the U.S. government that were proceeds of the 2016 security breach. In line with our original recovery plan, this is being converted to USD and paid to RRT holders.
Find out more here – https://t.co/UwCMNERes9
— Bitfinex (@bitfinex) February 25, 2019
All BFX tokens were destroyed during this process, and stockholders received the Recovery Right Token (RRT) which represented their respective amount in iFinex’s shares. Bitfinex, which was initially notified by the U.S. government about the retrieved funds last November, will now convert the 27.7 BTC in U.S. dollars and distribute them across the RRT holders.
In his official statement, Giancarlo Devasini, CFO at Bitfinex expressed his gratitude to the contribution of the U.S. government. He added:
We will continue to assist law enforcement with their inquiries, and also once again extend an open invitation to the hackers, or anyone harbouring information pertaining to the breach, to make contact in whichever medium they feel most secure with, to finally resolve the situation in a mutually beneficial manner.
The Recovery Increases Trust in Cryptocurrencies
The security breaches of crypto exchanges have been one of the main stress-points of cryptocurrencies since their inception and the inability to reverse transactions one of their main weaknesses compared to the traditional banking system. A decade after bitcoin launched, we keep experiencing issues concerning the safe storage of assets, the latest being the Cryptopia hack where more than $3 million disappeared.
While the amount of BTC recovered from the Bitfinex hack may seem insignificant as it represents only 0.023% of the total lost funds, the recovery demonstrates the power of blockchain technology and the ability to correct malicious human activities.
Hackers have employed numerous practices to exploit the vulnerabilities of centralized entities and countermeasures often seem to be one step behind them. Decentralized exchanges, such as the Binance DEX, and cold wallets could be an effective way to mitigate fraudsters’ power but cannot eliminate them. Additionally, crypto traders need timely access to their funds, hence storing assets in exchanges is essential.
High levels of security will be the cornerstone that will pave the way for the mainstream use of cryptocurrencies and such developments can increase people’s faith towards them.