BITCOINOX

Two Arrested in Israel After $1.5M Moved

One of the most prominent crypto cybercrimes lately took a dramatic turn on June 23, when two Israeli brothers were arrested regarding the 2016 Bitfinex hack and other crypto-related phishing attacks.

Barely short of 120,000 Bitcoin (BTC) was stolen in the attack back in 2016, an amount initially worth $72 million, however, after Bitcoin’s meteoric rise in the summer of 2019, the estimation of the stolen funds now amounts to around $1.4 billion. Speaking to Finance Magnates, an Israeli police spokesperson said that Eli and Assaf Gigi bagged tens of millions of dollars from their activities.

According to the spokesperson, the duo lured their victims by creating clone versions of major online crypto exchanges and wallet providers and shared links to them through both Telegram groups and other cryptocurrency-related communities.

The Next Web reported that the arrests mark the second time the Bitfinex hack has been brought back into the open in the past few weeks. On June 7, Cointelegraph reported that $1.5 million of the funds stolen in the hack had been moved from the hackers’ wallets to an obscure address. Anneka Dew confirmed that the transfers were not identified with any current company operations.

Origins of the hack 

In the days following the hack, Bitfinex offered a attractive reward for either the return of the funds or for information that could lead to them being found. Director of Community and Product Development Zane Tackett announced the exact amount on the Bitcoin subreddit: “5% of recovery and for information leading to recovery (but no bounty if no recovery); if multiple persons lead to recovery, share pro rata.”

The president of the Hong Kong Bitcoin Association, Leonhard Weese, revealed to Reuters that, regardless of the colossal measures of funds that are often stolen in hacks involving cryptocurrency, having to transfer in so many small pieces often means the payoff for the crime is far smaller.

Recovery scheme

On Aug. 3, 2016, Bitfinex reported a questionable exertion for the loss to be “socialized” among its existing customers. Many clients were outraged by the initiative, which would have purportedly brought in a 36% loss for every account holder. Bitfinex announced that customers would be given “BFX tokens” that could be redeemed on the exchange or be converted into company shares.

U.S. recovers small amount

The Bitfinex hack is not all doom and gloom, with the news that U.S. law enforcement tracked down and returned around $104,000, according to a Medium post published on Feb. 25.

The trade revealed that just 27.7 Bitcoin were returned. Clients who had taken the alternative to change their BFX tokens into company stock also received Recovery Right Tokens (RRT). Bitfinex reported that, having received some of the stolen coins, they had been converted into U.S. dollars and paid to RTT holders. 

According to the post, Bitfinex was first informed by the U.S. government that it had accessed the funds believed to be proceeds from the 2016 hack in November 2018.

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