When the Department of Justice announced it had seized billions in stolen cryptocurrency earlier this year, it seemed like great news for the victims of a hack that drained about $70 million from customer accounts at trading platform Bitfinex in 2016.

“It was the biggest relief of my life,” said Frankie Cavazos, who lost 15 bitcoins in the hack.

Over the past six years, the value of stolen cryptocurrencies has skyrocketed. At the time of the hack, one bitcoin was worth less than a thousand dollars. It would trade for around $20,000 today.

For Cavazos, receiving his bitcoins would be “a life-changing amount of money.”

But so far, thousands of victims like him have not experienced the happy ending they hoped for. Instead, they are embroiled in a battle over who is the rightful owner of all that stolen crypto.

On the day news broke that the funds had been recovered, Bitfinex publicly stated that the stolen bitcoins should be returned to the platform in a statement: “Bitfinex will work with the DOJ and follow appropriate legal processes to establish our rights to returning the stolen bitcoin.”

This is because the company believes it has already made its customers healthy by providing them with various digital tokens that customers could sell in exchange for money after the hack. A spokesperson for the company told CNBC that Bitfinex customers may have sold the tokens for cash and then used the money to buy more bitcoins at the time.

The decision to offer customers tokens came after the company decided to generalize its losses to all account holders by 36%. This means that everyone who had a Bitfinex account lost 36% of their assets – not just the users whose accounts were hacked.

The first token created by the company is called the BFX token. Customers received one BFX token for every dollar lost.

Bitfinex hack victim Franky Cavazos

CNBC’s YouTube documentary The Crocodile of Wall St.

Cavazos told CNBC that he felt as if Bitfinex had simply “thrown” these tokens at its customers and said he was not given the option to decline the BFX token.

He and several other victims of the Bitfinex hack spoke exclusively to CNBC about the documentary “The Crocodile of Wall Street”, which reported a theft of bitcoins and an alleged attempt to launder the stolen crypto.

One issue raised by CNBC customers is that when they decided to sell their tokens, they were actually worth pennies on the dollar.

“They pegged them at $1 per BFX token,” Cavazos said. “They put them on the open market and the price went from $1 to about 20 cents, so they were basically allowed to bail everybody out of debt.”

Rafal Bielenia, who had 91 bitcoins on the platform, said: “I sold these tokens as quickly as possible as soon as they became available. And I was only able to get about 25% of their value.”

Bitfinex hack victim Rafal Bielenia.

CNBC’s YouTube documentary The Crocodile of Wall Street.

For customers who did not sell the tokens immediately, the company later gave BFX token holders a chance to convert their tokens into shares of iFinex, the corporate entity behind Bitfinex, through other tokens created by the company called RRT and LEO.

Simply put, Bitfinex believes that customers have already been compensated fairly, and if they chose to sell the tokens before their value reaches a dollar, that is their choice. In a statement, the company told CNBC, “Upon receiving the bitcoins recovered from the 2016 security breach, Bitfinex committed to using 80 percent of the proceeds to buy back and burn LEO tokens after all RRTs have been redeemed.”

Essentially, Bitfinex wants the bitcoins stolen in the 2016 hack to be returned to the company and will return some of it to some of their customers in cash rather than bitcoin.

But some of the hack victims still claim that the bitcoins belong to them. And the idea that they could lose their bitcoins not once but twice seems impossible.

“Why would anyone doubt that I should get my money back? It was my property,” Bielenia said.

“I’m still going to try to get my hands on those 15 bitcoins because I truly believe they’re mine,” Cavazos said. “I can prove it through blockchain researchers.”

Will Hogarth, whose cryptocurrency was also stolen in the Bitfinex hack, told CNBC, “I’m still waiting for my bitcoins back and I see no reason why they would hold them.”

U.S. Deputy Attorney General Lisa Monaco told CNBC: “The victims, the individuals and the entities whose money they claimed was theirs, that were victims of this money laundering scheme, will ultimately file claims in court , who will decide how that money is dispersed.” However, no further details of this process have been released.

Photo booking for Heather Morgan and Ilya Lichtenstein.

Courtesy: Alexandria Adult Detention Center.

So far, the holdup appears to be that there is no resolution in the court case involving the couple, who investigators say were caught holding stolen cryptocurrency. Heather Morgan and Ilya Lichtenstein are accused of conspiring to launder billions in Bitcoins.

Morgan is an aspiring rapper who called herself “The Crocodile of Wall Street” and Lichtenstein, a self-described “tech entrepreneur, researcher and part-time wizard.” The duo face more than two decades in prison if convicted. They haven’t spoken yet. CNBC reached out to Morgan and Lichtenstein to get their side of the story, but neither agreed to an interview. So far, no one has been accused of hacking Bitfinex.

As their case makes its way through the court system, a multi-billion dollar battle is brewing over what happens to the money.

“At the end of the day, it’s going to be a dogfight over who gets that money.” Whether the government will hold them or not, whether Bitfinex will hold them or not, whether customers will get them back – anyone who tells you there is a clear answer is lying for their own benefit,” said crypto attorney David Silver.

David Silver, Cryptocurrency Attorney at Silver Miller

CNBC’s YouTube documentary The Crocodile of Wall Street.

With billions of dollars on the line, Silver expects “people will spend hundreds of millions of dollars to get their hands on this pot of gold.”

“I really think it’s going to be a battle,” agreed Cavazos,

“The end of this story – we don’t know yet,” he said. “But you can’t just walk away with a hack like this. There’s somebody who’s going to be involved who has to tell the truth and when that shoe drops it’s going to be really interesting and it’s going to affect who gets the money.”


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