Dirty Bitcoin Worth $1 Million Frozen in Bitfinex


While Bitcoin is often seen as a criminal’s best friend because of its anonymity, the fact that transactions are recorded on a transparent ledger makes it easy to track and link back to certain events, especially nefarious ones. This was especially true when a UK High Court set up a proprietary injunction on Bitcoin worth nearly $1 million that was obtained through a ransomware attack on a Canadian insurance company.

The funds have been found to have been laundered through major cryptocurrency exchange Bitfinex. Thus, with this information in hand, the proprietary injunction on the exchange prevents it from dealing with its own assets in this case. 

In order to get to the bottom of this, and to get some 96 BTC unfrozen, Bitfinex is now required to hand over account data and thus make the money laundering a lot less anonymous. It is an interesting process as due to strict KYC rules and AML regulations, when approached like this, exchanges have a lot of power on tracing Bitcoin transactions back to people. 

Ransomware attack

The attack on the insurance company saw 1,000 infected with malware that encrypted the files and made them accessible. After succeeding in this, the attackers then demanded $1.2 million in Bitcoin from the company.

The insurance for such an attack allowed the client to see part of the losses covered from such a cybercrime attack and led to the hackers agreeing to take $950,000 in Bitcoin to decrypt the files, as well as received a tool to unlock them a day after making the payment.

Still, the company needed 10 days to restore all of its systems, including 20 servers and 1,000 desktop computers.

Even once the entire fiasco was over, and the money seemingly long since laundered through the cryptocurrency exchange Bitfinex where the BTC ended up, the analysis of transactions has led to the High Court stepping in.

Assisting law enforcement

Cointelegraph contacted Bitfinex, but the exchange did not clarify the status of the ransomers’ Bitcoin or what data was handed over to the court, stating:

“Bitfinex has robust systems in place to allow it to assist law enforcement authorities and litigants in cases such as this. In this case, we have assisted the Claimant to trace the stolen Bitcoin and we understand the focus of the Claimant’s attention is no longer on the Bitfinex platform. It now appears Bitfinex is an entirely innocent party mixed up in this wrongdoing.”

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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