When the Justice Department announced it seized billions in stolen cryptocurrency earlier this year, it seemed like great news for victims of a hack that drained around $70 million from customers’ accounts on the Bitfinex trading platform in 2016.
“It was the biggest relief of my life,” said Frankie Cavazos, who lost 15 bitcoins in the hack.
Over the course of the last six years, the value of the stolen crypto skyrocketed. At the time of the hack, a single bitcoin was worth less than a thousand dollars. Today it would be trading for around $20,000.
For Cavazos, getting his bitcoins back would be “a life-changing amount of money.”
But so far thousands of victims like him haven’t experienced the happy ending they were hoping for. Instead, they’re embroiled in a battle over who is the legal owner of all that stolen crypto.
On the day the news broke that the funds had been recovered, Bitfinex publicly asserted that the stolen bitcoins should be returned to the platform in a statement: “Bitfinex will work with the DOJ and follow appropriate legal processes to establish our rights to a return of the stolen bitcoin.”
That’s because the company believes it’s already made its customers whole by providing them with a variety of digital tokens that customers could sell in exchange for cash after the hack. A company spokesperson told CNBC that Bitfinex customers could have sold the tokens for cash and then used the cash to buy more bitcoins at the time.
The decision to offer customers tokens came after the company decided to generalize its losses across all account holders by 36%. That meant everyone who had a Bitfinex account lost 36% of their assets – not just users whose accounts were hacked.
The first token the company created was called a BFX token. Customers received one BFX token for each dollar they lost.
Bitfinex hack victim Frankie Cavazos
CNBC’s “Crocodile of Wall St” YouTube documentary
Cavazos told CNBC he felt like Bitfinex just “dumped” those tokens on its customers and said he was not given the option to decline the BFX token.
He and several other Bitfinex hack victims spoke exclusively to CNBC for the documentary “Crocodile of Wall Street,” which reports on the theft of the bitcoins and the alleged attempt to launder the stolen crypto.
One issue customers brought up to CNBC is that when they decided to sell their tokens they were actually worth pennies on the dollar.
“They pegged ’em to $1 per BFX token,” Cavazos said. “They put ’em on the open market and it went from $1 to, like, 20 cents, so they were essentially allowed to basically FOMO everyone out of their debt.”
Rafal Bielenia, who had 91 bitcoins on the platform said: “I sold those tokens as fast as possible immediately when they became available. And I was only able to get like 25% of their value.” He believes, “there was no point in time that they refunded me – not in dollar terms, and not in bitcoin terms.”
Bitfinex hack victim Rafal Bielenia.
CNBC’s “Crocodile of Wall Street” YouTube documentary
For customers who didn’t sell the tokens immediately, the company later gave BFX token holders a chance to convert their tokens into equity shares of iFinex, the corporate entity behind Bitfinex through other tokens the company created called RRT and LEO.
To put it simply, Bitfinex feels the customers have already been compensated fairly and if they chose to sell the tokens before their value reached a dollar, that was their choice to make. In a statement, the company told CNBC, “Upon receipt of the bitcoins recovered from the 2016 security breach, Bitfinex has pledged to use 80 percent of the proceeds to buy back and burn LEO tokens, after all RRTs are redeemed.”
Essentially, Bitfinex wants the bitcoins that were stolen in the 2016 hack returned to the company and it will give a portion of that back to some of their customers in cash, not in bitcoins.
But some of the hack victims still assert the bitcoins belong to them. And the idea that they could lose their bitcoins not once, but twice, seems impossible.
“Why would anybody question that I should get my money back? That was my property,” Bielenia said.
“I still am going to be trying to get ahold of these 15 bitcoins because I truly believe they are mine,” Cavazos said. “I can prove it through the blockchain explorers.”
Will Hogarth, who also had his crypto stolen in the Bitfinex hack, told CNBC, “I still expect my bitcoin back and I don’t see any reason why they would keep it.”
U.S. Deputy Attorney General Lisa Monaco told CNBC, “Victims, individuals and entities whose money, who claimed that’s their money, that they were victimized by this money laundering scheme will submit claims ultimately to a court who will decide how that money is dispersed.” However, no further details about that process have been released.
Booking photos for Heather Morgan and Ilya Lichtenstein.
Courtesy: Alexandria Adult Detention Center.
For now, the holdup seems to be that there has been no resolution in the court case involving the couple investigators say got caught holding the stolen cryptocurrency. Heather Morgan and Ilya Lichtenstein have been charged with conspiring to launder billions in bitcoin.
Morgan is an aspiring rapper who called herself “the Crocodile of Wall Street” and Lichtenstein a self-described “tech entrepreneur, explorer and part time magician.” The duo is facing more than two decades in prison if they’re found guilty. They have not yet entered a plea. CNBC reached out to Morgan and Lichtenstein to hear their side of the story, neither agreed to an interview. So far, no one has been charged with hacking Bitfinex in the first place.
As their case makes its way through the court system, a multibillion-dollar battle over what happens to the money is brewing.
“Ultimately, it’s going to be a dog fight as to who gets this money. Whether or not the government gets to keep it, whether or not Bitfinex gets to keep it, whether or not the customers get it back — anyone who tells you there’s a clear answer is lying for their own benefit,” said cryptocurrency attorney David Silver.
David Silver cryptocurrency attorney at Silver Miller
CNBC’s “Crocodile of Wall Street” YouTube documentary
With billions of dollars on the line, Silver expects “people are going to spend hundreds of millions of dollars to get their hands on that pot of gold.”
“I do think it’s going to be a fight,” Cavazos agreed,
“The end of this story — we don’t know yet,” he said. “But you can’t just simply walk away with a hack like this. There’s someone that’s going to be caught up in this that has to tell the truth and when that shoe drops, it’s going to be really interesting and it’s going to impact who gets the money.”
Alphabet CEO Sundar Pichai during the Google I/O developers conference in Mountain View, California, on May 10, 2023.
David Paul Morris | Bloomberg | Getty Images
Alphabet‘s stock gained 3% Friday after signaling strong growth in its search and advertising businesses amid a competitive artificial intelligence environment and uncertain macro backdrop.
“GOOGL‘s pace of GenAI product roll-out is accelerating with multiple encouraging signals,” wrote Morgan Stanley‘s Brian Nowak. “Macro uncertainty still exists but we remain [overweight] given GOOGL’s still strong relative position and improving pace of GenAI enabled product roll-out.”
The search giant posted earnings of $2.81 per share on $90.23 billion in revenues. That topped the $89.12 billion in sales and $2.01 in EPS expected by LSEG analysts. Revenues grew 12% year-over-year and ahead of the 10% anticipated by Wall Street.
Net income rose 46% to $34.54 billion, or $2.81 per share. That’s up from $23.66 billion, or $1.89 per share, in the year-ago period. Alphabet said the figure included $8 billion in unrealized gains on its nonmarketable equity securities connected to its investment in a private company.
Adjusted earnings, excluding that gain, were $2.27 per share, according to LSEG, and topped analyst expectations.
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Alphabet shares have pulled back about 16% this year as it battles volatility spurred by mounting trade war fears and worries that President Donald Trump‘s tariffs could crush the global economy. That would make it more difficult for Alphabet to potentially acquire infrastructure for data centers powering AI models as it faces off against competitors such as OpenAI and Anthropic to develop largely language models.
During Thursday’s call with investors, Alphabet suggested that it’s too soon to tally the total impact of tariffs. However, Google’s business chief Philipp Schindler said that ending the de minimis trade exemption in May, which created a loophole benefitting many Chinese e-commerce retailers, could create a “slight headwind” for the company’s ads business, specifically in the Asia-Pacific region. The loophole allows shipments under $800 to come into the U.S. duty-free.
Despite this backdrop, Alphabet showed steady growth in its advertising and search business, reporting $66.89 billion in revenues for its advertising unit. That reflected 8.5% growth from the year-ago period. The company reported $8.93 billion in advertising revenue for its YouTube business, shy of an $8.97 billion estimate from StreetAccount.
Alphabet’s “Search and other” unit rose 9.8% to $50.7 billion, up from $46.16 billion last year. The company said that its AI Overviews tool used in its Google search results page has accumulated 1.5 billion monthly users from a billion in October.
Bank of America analyst Justin Post said that Wall Street is underestimating the upside potential and “monetization ramp” from this tool and cloud demand fueled by AI.
“The strong 1Q search performance, along with constructive comments on Gemini [large language model] performance and [AI Overviews] adoption could help alleviate some investor concerns on AI competition,” Post wrote in a note.
An Amazon employee works to fulfill same-day orders during Cyber Monday, one of the company’s busiest days at an Amazon fulfillment center on December 2, 2024 in Orlando, Florida.
Miguel J. Rodriguez Carrillo | Getty Images
For 10 years, Aaron Cordovez has been selling kitchen appliances on Amazon. Now he’s in a bind, because most of his products are manufactured in China.
Cordovez, co-founder of Zulay Kitchen, said his company is moving “as fast as we can” to move production to India, Mexico and other markets, where tariffs are increasing under President Donald Trump, but are mild compared with the levies imposed on goods from China. That process will likely take at least a year or two to complete, he said.
“We’re making our inventory last as long as we can,” Cordovez said in an email.
Zulay is alsotemporarily raising the price of some of its milk frothers, smores roasting sticks and other products. The company’s popular kitchen strainer now costs $12.99, up from $9.99 before Trump announced his sweeping tariff proposal earlier this month.
Amazon merchants are hiking prices for everything from diaper bags and refrigerator magnets to charm necklaces and other top-selling items as they confront higher import costs. E-commerce software company SmartScout tracked 930 products on Amazon that have seen increased prices since April 9, with an average jump of 29%.
The price hikes affect a range of categories, including clothing, jewelry, household items, office supplies, electronics and toys.
The trade war with China has threatened to upend sellers on Amazon’s third-party marketplace, which accounts for about 60% of the company’s online sales. Many merchants are based in China or rely on the world’s second-largest economy to source and assemble their products.
Sellers are now faced with the conundrum of raising prices or eating the extra costs associated with Trump’s new tariffs. It’s an existential threat for many sellers, who subsist on razor-thin margins and have, for the last several years, dealt with rising costs on Amazon tied to storage, fulfillment, shipping and advertising fees along with pricing pressure from increased competition.
CEO Andy Jassy told CNBC earlier this month that the company was “going to try and do everything we can” to keep prices low for shoppers, including renegotiating terms with some of its suppliers. But he acknowledged some third-party sellers will “need to pass that cost” of tariffs on to consumers.
Amazon’s stock price is down 15% so far this year, sliding along with the broader market. The company reports first-quarter earnings next week.
Goods imported from China now face import duties of 145%, though Trump said Wednesday his administration is “actively” talking with China about a potential deal to lower tariffs. Chinese officials on Thursday denied that trade talks are taking place.
About 25% of the price increases observed by SmartScout were initiated by sellers based in China, said Scott Needham, the company’s CEO. Last week, stainless steel jewelry maker Ursteel hiked prices on four of its products by $6.50, while apparel brand Chouyatou raised the price of some of its dresses by $2. Both businesses are based in China’s Zhejiang province.
Anker, a Chinese electronics brand and one of Amazon’s largest sellers, has raised prices on one-fifth of its products sold in the U.S., including a portable power bank, which went up to $135 from $110, SmartScout data shows.
Representatives from Anker, Ursteel and Chouyatou didn’t respond to requests for comment.
Zulay, headquartered in Florida, is one of many U.S.-based sellers raising prices. The company is also cutting costs. Cordovez said he’s been forced to lay off 19% of his workforce and slash online ad spending by 85%.
Desert Cactus, based in Illinois, is also taking action. Joe Stefani, the company’s president, has been looking to move production of some of his brand’s college-themed merchandise out of China and into Mexico, India and Vietnam. About half of Desert Cactus’ goods come from China, while the rest are made in the U.S., Stefani said.
An Amazon worker moves a cart filled with packages at an Amazon delivery station in Alpharetta, Georgia, on Nov. 28, 2022.
Justin Sullivan | Getty Images
One of the company’s top products is a customizable license plate frame that’s manufactured in China. At the start of Trump’s first term in 2016, Stefani’s company paid import and shipping fees of 4% on the license plates. That rate has since skyrocketed to 170%, he said.
“The tariffs can’t stay this high,” Stefani said. “There’s so many people that just aren’t going to make it.”
Stefani said he expects Desert Cactus will end up raising prices on some products, though he’s worried shoppers might be put off by sticker shock.
“Will someone be willing to pay $50 for a hat on Amazon?” Stefani said. “You know it’s going to be expensive at the ballpark, but on Amazon we don’t know.”
Dave Dama, co-founder of health and beauty business Pure Daily Care, said the price to manufacture one of his skin-care products in China jumped to $25 from $10. Most Amazon sellers will have no choice but to raise prices, he said.
“If you were selling something for $40 and making a $7 or $8 profit at the end of the day, with these tariffs, those days are gone,” Dama said. “You can’t do that anymore. It’s unsustainable.”
Pure Daily Care plans to stagger price increases over several weeks, and only on products “we absolutely need to,” to keep Amazon’s algorithms from ranking it lower in search results or losing the valuable buy box, he said. The buy box determines which listing pops up first when a shopper clicks on a particular product, and the one that gets purchased when they tap “Add to Cart.”
An Amazon spokesperson said the company’s pricing policies continue to apply.
“As always, sellers set their own prices, and we regularly monitor how we highlight great prices as Featured Offers to provide customers with low prices across a wide selection,” the spokesperson said in a statement.
Dama said his company has enough inventory for some products to last up to six months, which it aims to “stretch as long as possible” in the hope that China and the U.S. can reach a trade deal. The company is also forgoing some sales promotions and discounts, while pausing spend on some display and video ads.
Regarding his inventory, Dama said, “We can try to stretch that seven, eight, nine months, which buys us a lot more time for this thing to work out, hopefully.”
Chinese start-up Pony.ai said Friday it will develop autonomous driving technology in partnership with Tencent Cloud and deploy robotaxi services on tech giant Tencent’s WeChat and other applications.
The Nasdaq-listed company which specializes in autonomous vehicle technology, particularly robotaxis androbotrucks, said in a press release that the deal will include cooperation in areas such as cloud services, map data, information security and intelligent cockpit ecosystems.
The arrangement will also see the two companies integrate Pony.ai’s robotaxi ride-hailing services within Tencent’s popular WeChat app as well as other applications like Tencent Maps.
Both companies had been in talks “for quite some time,” Pony.ai CEO James Peng told CNBC on the sidelines of the Shanghai Auto Show on Friday. He cited Tencent’s huge user base and its cloud offerings as factors supporting the “win-win” collaboration as the start-up continues to scale up.
Following the partnership, Peng said that “hopefully in the near future,” users would be able to call Pony.ai robotaxi rides straight through the WeChat app.
“Pony.ai possesses industry-leading autonomous driving technology accumulations, while Tencent excels in cloud services, mapping, and cockpit ecosystem technologies,” Vice President of Tencent Group and President of Tencent Smart Mobility Zhong Xiangping was quoted as saying in the Friday release.
“This strategic partnership between the two parties is not only about complementing each other’s technologies and resources but also marks a new starting point for collaborative innovation,” he added.
The release said that the partnership would also see both companies collaborate on the development, testing, and operation of Robotaxis, particularly in L4-level autonomous driving.
According to SAE International, L4 is a type of autonomous driving that allows drivers to take their eyes off the road in designated areas. For comparison, L3 is considered a hands-off system, but drivers must actively monitor the vehicle and be ready to take over the wheel.
The Tencent Cloud agreement comes a day after it was reported that Pony.ai unveiled its L4, seventh-generation robotaxi solution at the Shanghai Auto Show on Wednesday. The company’s shares surged about 40% in the U.S. on Thursday.
The start-up continues to establish itself as a prominent player in China’s autonomous driving industry. The company obtained China’s first permit to charge fares for fully driverless taxis in core parts of a business district of Shenzhen, where Tencent is headquartered.
However, the firm may be implicated in increasing trade tensions between China and the U.S. as the latter is a market Pony.ai considers “hugely important” to its expansion plans.
James Peng, co-founder and chief executive of Pony.ai this week reportedly told the Financial Times that the company is considering a secondary listing outside the U.S. amid mounting concerns that Washington will push for the delisting of Chinese companies off the New York Stock Exchange.
If this were to happen, it would come less than six months after the company’s initial public offering in the U.S. Notwithstanding, Peng told FT that a lot of factors need to be considered.