The Zombies on the Blockchain

Crypto Nightmares: The Scariest Crypto Stories

• The Stage: Bitfinex.
• The Witching Hour: 2 August 2016.
• The Bounty: 72 million USD / 119,756 Bitcoin (BTC).

In the dark, labyrinthine passages of the crypto space, at an hour when Bitcoin’s appeal reached its apogee, there stood Bitfinex — a nexus where traders’ hearts beat with the shady secrets of the blockchain. In the annus horribilis of 2016, Bitfinex represented the hope for all disciples of crypto fortune.

But on that ill-fated day, as the digital sun waned in the digital firmament, Bitfinex delivered its mournful proclamation — hackers had breached the exchange’s fortress. They seized 119,756 Bitcoins; the sinister treasure was worth $72 million, making it one of the worst hacks in the annals of cryptocurrency, a macabre augury of despair.

The value of bitcoin, once the shining star of the crypto firmament, plummeted by 20%, its once vibrant aura reduced to a blur of darkness. So Bitfinex found itself dancing on the brink of bankruptcy and was about to come up with an extraordinary pact with the crypto platform’s users.

Bitfinex’s sinister pact stipulated that all losses would be shared between all customers, a sacrifice demanded of the innocent and the guilty alike. Customers would contemplate their declining fortunes, a sacrificial offering to the evil gods of blockchain.

To further ease the damned’s anxiety, Bitfinex granted each mourning soul a curious relic — a BFX token, a strange acronym infused with memories of their stolen wealth. This pact with the crypto demon was simple: one BFX token for every dollar lost, with the added twist that the demon took their soul before they even signed the manuscript in their own blood.

Bitfinex’s obsessional promise: seek investment and buy back the obscure BFX tokens!

Persevering in their collaboration with the authorities, determined to unearth the treasure buried right up until that beautiful day in 2018, they discovered 27.66 BTC, a tiny fraction, a meager offering to appease the restless souls of the zombified Bitcoins.

Bitfinex, as a tormented investigator, asked anyone with knowledge of the heinous hack to come forward, and in 2019, shadows began to stir in the blockchain night; two Israeli brothers would be implicated in the 2016 crypto heist. The nightmare continued in November 2020, when 5,000 zombie bitcoins — around 5% of the total amount of stolen bitcoins — were moved to an unknown wallet. Then, it was April 2021 when the Twitter oracle known as “Whale Alert” proclaimed the movement of $623 million, or 10% of the stolen treasure.

If, after 5 years, the crypto horror story has continued, it is now reaching its climax. In February 2022, the US Department of Justice launched a thunderous indictment: a conspiracy to launder the staggering $4.5 billion in zombie Bitcoins stolen from Bitfinex. From the depths of the digital abyss emerge two figures, Ilya Lichtenstein and Heather Morgan, architects of a malicious ritual aimed at purifying their digital fortunes.

As the ashes of hacking are deposited in the crypto verse, the digital world is confronted with a sad truth.

Crypto companies, like modern-day alchemists, work to protect their kingdoms, whatever the consequences for users, and meanwhile, the evil pirates creep around like shadows in the night. The stolen bitcoins, the digital zombies, wait in the depths of the blockchain, poised for a moment of resurrection because the past, no matter how dark, never really dies on the blockchain.

Security Lesson: In the quest for digital wealth, trusting the promise of centralized platforms isn’t enough: your funds are actually SAFU only in a wallet to which you have the private key.

Therefore, it is best to store on exchanges only the assets you wish to trade in the short term, while longer-term investments should be stored in a fully secured wallet.

If you enjoy a good scary story but value the safety of your cryptos, you might be interested in following Callisto Network, the only independent blockchain security auditors that have never been hacked… NEVER!

👉 I like scary crypto stories, but I prefer my funds!