US Court Requests Advice on Returning 2016 Bitfinex Attack Crypto

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The US government’s motion to return cryptocurrency that was seized in connection with the 2016 Bitfinex hack has not yet been resolved by a federal court. The judge has requested additional clarification before making a decision.

Judge Colleen Kollar-Kotelly directed federal prosecutors to provide further explication regarding the government’s request to return funds to Bitfinex in a filing in the US District Court for the Southern District of New York on January 28. The order is a component of the legal proceedings against Heather Morgan and Ilya Lichtenstein, the husband-and-wife tandem who were convicted of laundering funds that were taken from the exchange.

The United States government confiscated a total of 94,643 Bitcoin (BTC), as well as lesser quantities of Bitcoin Cash (BCH), Bitcoin Satoshi Vision (BSV), and Bitcoin Gold (BTG), from Lichtenstein, who also acknowledged being the mastermind behind the 2016 theft. The criminal case against the duo resulted in the confiscation of the funds, which are currently valued at billions of dollars.

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Nevertheless, Judge Kollar-Kotelly expressed anxiety that the forfeiture order’s amount could be improperly reduced by returning the stolen crypto to Bitfinex, which could be inconsistent with previous court decisions on comparable cases. She requested that the US government elucidate its stance by February 4, following which she will determine whether the exchange should receive restitution.

One of the most significant cryptocurrency intrusions of the time was the August 2016 Bitfinex attack, which resulted in the seizure of 119,754 BTC. In 2022, US authorities apprehended Lichtenstein and Morgan for the purpose of laundering the stolen funds, thereby recovering a substantial portion of the digital assets.

Both individuals were sentenced to five years (Lichtenstein) and 18 months (Morgan) in federal prison after entering guilty pleas in 2023. Morgan was scheduled to report to a federal facility on January 24, whereas Lichtenstein has remained in detention since his apprehension.

Morgan returned to social media after her sentencing in November 2024, and she once again made headlines. She has rebranded herself as “crypto’s beloved felon” despite her criminal record, and in December, she even launched a Cameo channel to commercialize her notoriety.

Although there were numerous victims of the 2016 Bitfinex breach, a court filing from October 2024 suggested that Bitfinex may be the sole entity eligible for reimbursement. It is still uncertain whether any individuals will receive compensation, despite the fact that the US government had extended an invitation to impacted individuals to submit statements.

The court is responsible for determining the fate of the seized crypto as the deadline of February 4 approaches. Assuming its approval, it could represent one of the most significant cryptocurrency restitutions in legal history. Nevertheless, the destiny of the billions in seized crypto could undergo an additional legal twist if the magistrate deems the request improper.

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