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More than $26 million in Bitcoin stolen in 2016 Bitfinex hack moved

Photo of: Dennis Ramos
by Dennis Ramos

In 2016, more than $60 million worth of bitcoin was stolen from one of the world’s largest digital currency exchanges Bitfinex. This theft at that point represented the largest loss of bitcoins by an exchange. Given the size of the theft, it triggered major confusion and frustration among traders and observers. And now almost 4 years later, we hear news pertaining to the same hack. 

As per estimates, More than $26 million in Bitcoin connected to this much-controversial hack of crypto exchange Bitfinex has been moved across 7 different transactions on Wednesday. 

The seven transactions and that too almost 4 years later was discerned by the noted Twitter-based data bot solutions called Whale Alert. Through its official Twitter account, it informed the users about this activity. These kinds of transactions as per the data bot are the first of its kind since August. Out of the 7 transactions that happened yesterday, six transactions were valued in the interval between $4.1 million and $4.8 million in value. The 7th transaction was for a smaller amount of about $12,000. 

Similar to such tracks of transactions of stolen bitcoins tied to the 2016 hack took place in late July and early August this year. Whale Alert reported nine transfers of funds connected to the 2016 hack of Bitfinex. For the transactions that had taken place in August, Bitfinex also gave out a statement in which it pledged rewards for all efforts that would lead to the recovery of the stolen funds that approximated 119,756 BTC at the time. 

The exchange said in August:

“Bitfinex is offering a reward to any persons that connect us with hackers responsible for the unauthorized transfer of almost 120,000 bitcoins from the exchange in August 2016. As part of the same initiative, Bitfinex is also offering a reward to the hackers themselves for the return of the stolen property.”

Till that point, Bitfinex had recovered roughly 27 BTC which was obtained by the US government in one of its aggressive investigations. At the time BitFinex got those funds in early 2019 and when it came up with the financial reward there were additional recoveries registered. Ever since the hack that took place in August 2016, the funds tied to the breach have been moving through a series of traced wallets. 

Back then, the hack spoke at length about the vulnerabilities in the manner Bitfinex structured its accounts and how it uses the Bitcoin wallet provider BitGo as an additional layer of security for transactions. Bitfinex and BitGo announced in 2015 about a system whereby in multi-signature wallets the keys will be divided among many owners to manage risks. 

The company was looking at finding a new alternative to the standard process used by the exchanges at the time which saw customer funds intermingled in larger offline wallets. Instead, each user had their own set of keys created on the platform and Bitfinex has 2 of the held kets and BitGo used the third to co-sign transactions. 

Still, unclear who to blame, the recent move by the hackers is being watched by Bitcoin sleuths to understand where it is coming from.