More info at https://cryptocurrents.net/
Loading Something is loading.
Bitcoin billionaire Mike Novogratz has said the recovery of $3.6 billion stolen in a 2016 hack on the Bitfinex exchange is a positive sign for the crypto world, because it shows some of the merits of blockchain technology.
The US Justice Department said Tuesday it had seized the majority of the money stolen in the $4.5 billion hack in 2016. It said officers had arrested two people, Ilya Lichtenstein, 34, and his wife Heather Morgan, 31, for an alleged conspiracy to launder cryptocurrency taken in the attack.
Critics have long said that hacks and scams are a key reason to stay away from the cryptocurrency market.
But Novogratz tweeted Tuesday that the recovery of the funds is "medium-term bullish for crypto." Novogratz founded the crypto investment company Galaxy Digital in 2018 and has a fortune of roughly $5 billion, according to Bloomberg.
He suggested that the traceability of transactions on crypto networks is a benefit of the technology. "It's why 3 letter agencies are learning to like $BTC," he said. "It's a good day for the crypto security companies."
Authorities had been hunting for the money since soon after a hacker broke down Bitfinex's defenses in 2016 and stole 119,754 bitcoin. Since then, the bitcoin price has surged, meaning the stolen tokens were worth roughly $4.5 billion as of Tuesday.
In its statement, the Justice Department gave an account of how it had tracked the movements of the money during a "complicated money laundering process." The couple have not been charged with the hack itself, but prosecutors said the stolen funds were sent to a crypto wallet under Lichtenstein's control.
Prosecutors said the fact that bitcoin is underpinned by blockchain technology – which means a public ledger of transactions on the network is available to see – was key to recovering the funds.
"Federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system," Assistant Attorney General Kenneth Polite said.
Read more: A bitcoin bull and investing chief overseeing $1.7 billion lays out how to tackle a crypto winter that could last for at least a year — and 4 cheap projects that will thrive when the halving triggers the next bull cycle
Authorities last year managed to recover roughly $2.3 million, which was paid as ransom in bitcoin by Colonial Pipeline after a major hack. But the Justice Department said Tuesday's seizure was the largest to date.
However, Mark Haefele, chief investment officer at UBS Global Wealth Management, said the recovery is a reminder of the dangers of investing in crypto.
"Cybersecurity issues are just one of several significant risks investors face when speculating on crypto tokens and coins, which we think is suitable only for highly risk tolerant and speculative investors," he said in a note Wednesday.
Morgan and Lichtenstein's lawyer, identified by Bloomberg as Anirudh Bansal, was not immediately available to comment when contacted via email by Insider.