US government prepares victim notification in Bitfinex hack

A United States district judge has approved the government’s motion for order authorizing alternative notification procedures in the case of the funds recovered from Ilya Lichtenstein and Heather Morgan from the Bitfinex hack. 

This approval will allow the US to post a notification about the case on the Department of Justice’s (DoJ) large cases website “out of an abundance” of caution so that individuals who could potentially raise claims have an opportunity to do so.

However, the US government also notes that it “is not aware of any person who qualifies as a victim… beyond perhaps Bitfinex.”

Read more: Bitfinex hacker Razzlekhan was job hunting at Bitcoin 2024

The Bitfinex Hack Haircut

This case centers around funds recovered from Lichtenstein and Morgan after they pleaded guilty to laundering the proceeds of the 2016 hack.

The hack is one of the largest thefts of bitcoins ever, and in response, Bitfinex haircut many customer accounts, replacing the funds in their accounts with a special BFX token representing the losses.

The consent order specifically claims that Bitfinex represented to the US government that “iFinex Inc. allocated the losses from the hack across all customer accounts. This resulted in an approximately 36% reduction in account value across all accounts.”

However, this appears not to be the full truth. Zane Tackett, a former Bitfinex executive, has previously acknowledged on X (formerly Twitter) that Coinbase did not receive the same haircut as other accounts on the platform.

This comment from Tackett confirmed earlier reporting from Nathaniel Popper. 

Protos reached out to Bitfinex for comment on this apparent discrepancy, but it did not respond before publication. 

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