K33 Research predicts a potential 30% drop in U.S. Bitcoin reserves due to the conclusion of the Bitfinex hack legal proceedings.
K33 Research has projected that U.S. Bitcoin reserves could see a significant reduction of approximately 30% following the resolution of legal actions related to the Bitfinex hack. Analyst Vetle Lunde highlighted that the positive momentum of the LEO coin suggests that the legal proceedings are approaching their conclusion.
This potential decline in reserves is linked to the 94,643 BTC that were confiscated from hacker Ilya Lichtenstein's wallet. Lichtenstein was sentenced to five years in prison in November 2024 for laundering the stolen cryptocurrency, while his wife, Heather Morgan, received an 18-month sentence. Both have admitted guilt and consented to return the stolen assets.
In January 2025, U.S. prosecutors requested court approval to return nearly 80% of the 119,754 BTC to Bitfinex. Lunde noted that Bitfinex plans to use 80% of the recovered coins to buy back and burn LEO tokens over the next year and a half.
“Bitfinex has indicated that upon receiving the coins, it aims to allocate a substantial portion for LEO buybacks,” Lunde remarked.
He explained that the value of LEO is influenced by buybacks driven by the exchange's trading revenues and the expected future burn of tokens. Based on his analysis, the fair valuation for LEO should be around $5 billion, assuming a Bitcoin price of $65,000, yet it is currently valued at about $8 billion, which is 60% higher than the projected figure.
Implications for U.S. Reserves
Lunde pointed out that the confiscated 94,643 BTC represents roughly 30% of the total Bitcoin reserves held by U.S. authorities, which amount to 328,372 BTC. He clarified that U.S. law allows for the return of assets to identifiable victims, and the Bitfinex coins fall under this provision.
In October 2024, Bitfinex was officially recognized as the primary victim of the hack. However, Lunde noted that under U.S. asset forfeiture law, third parties can assert their ownership claims before any distribution occurs. This has led to further litigation, as former Bitfinex users and the exchange itself contest the ownership of the coins.
“Many claimants argue they are direct victims entitled to receive Bitcoins, but the claims often pertain to funds withdrawn post-hack rather than rights to the stolen coins,” Lunde added.
Until these ownership disputes are resolved, the coins remain in a frozen state. Notably, Lichtenstein recently released a video from prison, asserting that he masterminded the Bitfinex hack independently.
