In late 2019, Canadian insurance company known as AA had a massive cyber attack involving ransomware software. The attack left the company paralyzed and as a result, it had to pay out almost 109 BTC ($1.2 million at that time) in Bitcoin to the attackers in return for decryption software to help restore their systems. After that, some of the crypto had been traced to a wallet belonging to cryptocurrency exchange Bitfinex.
AA then demanded that Bitfinex should seize these funds and return them but the latter refused and a legal battle ensued. The massive suit against the cryptocurrency exchange started with AA as the plaintiff. But, it was always going to be very difficult for AA to recover these funds.
While this seems like a on-off event, it is true that most of these cases go against the plaintiffs who had BTC taken away from them. Bitfinex was required by the UK-based judge overseeing this case to freeze the funds and disclose the identity of the owners. They did that but unfortunately, the Bitcoin had already been transacted with before they were deposited on Bitfinex. This means that the hackers in all probability had already transacted with their Bitcoin and therefore, a direct relationship with the current owners and the purported hackers couldn’t be established. Bitfinex therefore claimed that the current owner of the crypto weren’t the culprits and were therefore, allowed to retain their custody under the ruling.
AA for their part couldn’t prove the case and had to instead pay Bitfinex’s legal fees too. This does seem unreasonable to a large extent for many but that is how life is going to be like when dealing with cryptocurrencies.
Bitcoin gives the people freedom to control their money and be relatively safe from cyber attacks, but it also poses other serious fiscal conundrums. Case in point is the recent suit involving Bitfinex and AA. The 14-month legal struggle of AA failed to result in any decision in their favour. As a result, the company had to drop their lawsuit recently and even pay their legal fees.
So, while the financial freedom brought upon by Bitcoin is a great opportunity for many around the world, it is also going to open a new range of ethical and legal challenges. Was it ethical for Bitfinex to retain that money especially when a direct link between AA and the Bitcoin was proven apart from the legal perspective? What will happen if two foreign governments are involved in the near future as Bitcoin ownership figures rise among governments around the world? These are just some of the challenges the world will have to address in the near future.
Image source: Beatingbetting.uk under CC
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