In 2016, Bitfinex lost a reported 119.756 worth of Bitcoin in a cyber-assault. The US government working on the situation managed to retrieve a portion of the stolen cryptocurrency and returned the funds to cryptocurrency platform Bitfinex.
The hacking saw Bitfinex launch a thorough investigation with the aid of international enforcement agencies in hopes of recovering the stolen funds. During the process, Bitfinex applied a strategy to help the accounts who lost funds by crediting them with BFX, a US Dollar token. BFX served as a temporary replacement to the damages the customers have suffered. The trading platform offers its users to redeem BFX for dollars or invest it in shares for iFinex Inc., the firm that operates and owns Bitfinex.
Bitfinex’s Response to the Hack
Following the retrieval of 27.7 Bitcoin by the US government, Bitfinex destroyed BFX tokens and replaced them with Recovery Right Tokens or RRTs, which represents iFinex’s shares. The trading platform then converts the recovered amount to US dollars to distribute the money to the users with RRT.
The recovery of the stolen bitcoin can be beneficial for cryptocurrencies. Since its inception, crypto exchanges suffer from the threat of security breaches, which is one of its weakest point compared bank’s airtight security system. Safe storage of bitcoin remains a questionable issue for cryptocurrency because of hackers. Despite having a decade in existence, bitcoin continues to experience problems like the $3million cyber-robbery on exchange platform Cryptopia. The US government’s actions can provide cryptocurrency users assurance over malicious activities, security improvements, and recovery of stolen assets.
With an improved level of security, cryptocurrency can see itself in the mainstream market while garnering the trust and faith of people on the ever-growing online currency.