The ecosystem of digital currencies, assets and businesses becomes more dazzling, complex – and hypocritical – by the day.
On the hypocritical side, we have lots of material to choose from, the latest being the U.S. Justice Department’s seizure of more than US$3.6-billion worth of bitcoins nabbed from a cryptocurrency exchange called Bitfinex in 2016. It was the largest recovery of stolen crypto ever. Two suspects in Manhattan were arrested for allegedly trying to launder the proceeds.
According to Chainalysis, a blockchain data platform, a record US$14-billion in cryptocurrencies was stolen last year, almost double the amount in the previous year – mostly via platforms that you could label DeFi. Exchanges themselves also get hit. Mt. Gox of Japan was the first biggie, back in 2014, when hackers stole about 850,000 bitcoins, valued at US$450-million at the time . Exchange hacks continue today.
So far, so good. Cryptocurrency users even convinced themselves that Bitcoin, Ethereum and their hundreds of rivals with zany names such as SushiSwap and PancakeSwap were en route to becoming legitimate currencies, even though they had no political or institutional support. The theft of the bitcoins in the Bitfinex hack and the alleged laundering of those coins rather upset crypto users’ dream world. The victims – we don’t know who the real owners of the bitcoins were – needed the help of the non-DeFi world, in this case the Justice Department, to retrieve the missing coins and press charges. The department has scored a few other victories in tracking down stolen cryptocurrencies.