Cryptocurrency Exchange Offers '$400 Million' Reward for Return of Stolen Bitcoin

Cryptocurrency exchange Bitfinex says it can pay out the equivalent of $400 million for the return of bitcoin stolen in a 2016 heist.

The Hong Kong-based platform—used to trade digital currencies—said in a statement today the reward was available for anyone who puts the company in contact with the culprits, but it is also willing to barter a deal with the hackers' directly.

In August 2016, hackers breached Bitfinex security systems and made more than 2,000 transactions involving just under 120,000 bitcoin, worth around $70 million at the time. It was the second heist in two years after a 2015 attack lost about $400,000.

According to Bitfinex, which is under a fraud investigation in the U.S., the person who puts officials in contact with the hackers would receive five percent of the total bitcoin recovered, while the hackers could receive 25 percent as part of the deal.

In February last year, U.S. authorities recovered a little over 27 bitcoin stolen in the 2016 cyberattack, which is currently worth the equivalent of about $300,000.

Minus the coins recovered, the stolen bitcoin is still worth more than $1.3 billion today. Bitfinex said 30 percent would cover the reward, over $400 million.

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Bitcoin values fluctuate daily and suffer notoriously unpredictable market swings. Today, a single bitcoin is worth over $11,000, but in August 2016 it was around $650.

"This incident is a dark chapter in our exchange's history, and we are pleased to offer this reward as further evidence of our determination to obtain the lost property. We have learned valuable lessons from this painful episode, addressing the security issues and vulnerabilities associated with the theft," it said in a statement posted today.

Bitfinex said that it will request one Satoshi—the smallest unit of a bitcoin—be sent from the wallet address responsible for the hack to a wallet specified by the firm.

It comes after Cointelegraph reported someone with access to the bitcoin stolen from Bitfinex in 2016 had moved the equivalent of $12 million in the past week.

"As the recent hacking incidents at Twitter and Ledger demonstrate, this type of crime continues to be a threat for all businesses in the digital asset space and the wider technology sphere," Bitfinex's said. "No-one in our community can...be complacent about the ingenuity of criminal gangs to perpetuate new types of fraud."

Last month, a slew of high-profile Twitter profiles including Bill Gates, Elon Musk and Barack Obama, were compromised to spread a brazen crypto scam.

Bitfinex is registered in the British Virgin Islands and owned by a parent company called iFinex Inc. It is believed to overlap with another cryptocurreny outfit known as Tether. CoinMarketcap currently lists it as the sixth biggest exchange by trade volume.

In April 2019, New York Attorney General Letitia James accused iFinex Inc. ownership of being associated with a "cover-up to hide the apparent loss" of $850 million.

According to a media release at the time, James claimed Bitfinex no longer had access to more than $850 million of "co-mingled client and corporate funds" that it gave to a Panamanian entity called Crypto Capital Corp without telling investors.

The filing said iFinex Inc. executives had engaged in a series of "conflicted corporate transactions," giving Bitfinex access to up to $900 million of Tether reserves.

"Those transactions—which also have not been disclosed to investors—treat Tether's cash reserves as Bitfinex's corporate slush fund, and are being used to hide Bitfinex's... undisclosed losses and inability to handle customer withdrawals," it read.

Bitfinex released a response saying the court filings had been "written in bad faith" and were "riddled with false assertions," denying that any such losses had taken place. New York's Supreme Court rejected Bitfinex's appeal last month, Bloomberg reported.

Bitcoin
In this photo illustration, visual representations of the digital Cryptocurrency, Bitcoin, gold chain necklace and silver coins are displayed atop Japanese 10,000 yen banknotes on July 7, 2020 in Katwijk, Netherlands. Yuriko Nakao/Getty
Cryptocurrency Exchange Offers '$400 Million' Reward for Return of Stolen Bitcoin | Tech & Science