Bitfinex should receive 95k BTC seized in 2016 hack, says USG

U.S. prosecutors have requested court approval to return nearly $10 billion in Bitcoin recovered from the 2016 Bitfinex hack.

According to a court filing, federal prosecutors plan to remit 80% of the 119,754 Bitcoin (BTC) recovered from the Bitfinex crypto exchange hack back to the platform.

Government investigators seized 94,643 BTC from Ilya Lichtenstein, the individual who hacked Bitfinex in 2016 and laundered the proceeds with his partner, Heather “RazzleKhan” Morgan.

The BTC stash was extracted from the original wallet used by Lichtenstein during the hack. Therefore, it can be returned as “in-kind restitution,” prosecutors wrote to a federal judge. Back in October, federal attorneys argued that Bitfinex may be the sole victim, paving the way for this distribution plan according to U.S. law.

Outstanding Bitfinex Bitcoin is “complicated”

The remaining assets, approximately 25,000 BTC, may be more difficult to return. In the filing, prosecutors explained that Lichtenstein and Morgan had deposited portions of the stolen tokens into crypto mixers, darknet markets, and other “technologically sophisticated” platforms.

Due to these laundering attempts, those funds cannot be returned directly. The Department of Justice has proposed an ancillary forfeiture process to recover the remaining BTC, though the timeline for this process remains unclear.

Lichtenstein and Morgan stole nearly 120,000 BTC from Bitfinex in 2016 — a trove now worth almost $12 billion. Authorities arrested Lichtenstein in February 2022, and he pleaded guilty to money laundering conspiracy charges in 2023.

Lichtenstein was sentenced to five years in prison, while Morgan is to be jailed for 18 months.