Key Insights:
- Bitcoin news showed that K33 Research analyst Vetle Lunde reported that roughly 94,636 BTC from the 2016 Bitfinex hack could be returned to victims.
- LEO token trades at a 60% premium to the implied fair value of $5 billion.
- The US government holds approximately 328,372 BTC total.
The latest Bitcoin news cycle confronted a narrative collision between the US Bitcoin reserve policy and legal restitution.
K33 Research Vetle Lunde noted that approximately 30%of the Strategic Bitcoin Reserve could exit government custody via a victim-return pathway explicitly outlined in the March 2025 executive order.
The US government established the reserve with clear language prohibiting sales while simultaneously carving out exceptions for returning seized assets to identifiable crime victims.
Bitcoin News: Strategic Reserve Framework Always Allowed Victim Returns
Lunde published an analysis on February 25 explaining that the US government currently holds an estimated 328,372 BTC following additional seizures throughout 2025.
However, roughly 94,636 BTC traced to the 2016 Bitfinex hack fell into a distinct category, for which the Strategic Bitcoin Reserve executive order explicitly permitted disposition for victim restitution, court orders, and other lawful requirements.
The March 2025 executive order stated that government Bitcoin deposited into the reserve “shall not be sold.”
Yet, it simultaneously allowed agencies to return assets when they determined the coins “can and should” be returned to “identifiable and verifiable victims of crime.”
This meant the upcoming Bitcoin news headline “US government sheds 30% of Strategic Bitcoin Reserve” would technically be accurate while fundamentally misrepresenting the nature of the transaction as legal restitution rather than a discretionary liquidation.
The US government seized approximately 94,636 BTC connected to the Bitfinex hack in February 2022, valued at over $3.6 billion at the time.
The defendants later pleaded guilty, and court proceedings signaled that the Bitcoin could be returned in kind rather than sold or auctioned.
However, US forfeiture law required that third parties be allowed to assert ownership claims before assets were distributed, creating an ancillary legal proceeding where former Bitfinex users and the corporate entity itself argued over entitlement.
Bitcoin News: LEO Token Premium Creates Relative Value Question
Bitfinex previously communicated that upon receiving the recovered Bitcoin, it intended to allocate 80% of the recovered amount toward buying and burning LEO tokens over 18 months.
This commitment created a quantifiable valuation anchor for traders attempting to price the legal outcome into LEO’s market value before any transfer occurred.
The mathematics were straightforward: 80% of 94,636 BTC equaled 75,708 BTC, which at current Bitcoin prices around $65,500 represented approximately $4.98 billion in potential buy-and-burn activity.
LEO derived value from two primary sources: ongoing buybacks funded by Bitfinex trading revenues, and the expected future burn tied to recovered Bitcoin.
Lunde noted that roughly $25 million worth of LEO had been burned over the past year through trading-revenue buybacks alone.
Using a simple discounted cash flow model with a 15% discount rate, Lunde calculated that trade-related buybacks implied a fair value of approximately $125 million.
At the same time, the Bitcoin-recovery component would add roughly $5 billion to the reference value if Bitfinex executed its stated plan.
LEO’s market capitalization currently sat near $8 billion, representing a 60% premium to the implied Bitcoin-adjusted fair value.
Lunde characterized this as the highest premium since the massive, long-lasting premiums following the original seizure announcement in 2022.
As a result, it raised the central question of whether current pricing reflected credible front-running of an imminent transfer or simply illiquidity-driven noise.
US Government Bitcoin Transfer Timeline Remains Uncertain
The legal process for determining entitlement to the recovered Bitcoin continued without a publicly announced resolution date.
As per the latest Bitcoin news, some claimants argued they were direct victims who should receive Bitcoin individually. In contrast, Bitfinex argued that many claims related to post-hack balance haircuts rather than specific ownership of the stolen coins themselves.
Until courts resolved these competing claims, the coins remained frozen in government custody.
For Bitcoin news observers, the absence of a confirmed timeline created both the trade opportunity and the trade risk.
The US government could transfer the coins at any time following a legal resolution, potentially causing sudden volatility in both Bitcoin spot markets and LEO token pricing.
The executive order’s explicit permission for victim returns meant no additional policy approval was required, only completion of the legal entitlement process.
Short-Selling LEO Premium Confronts Illiquidity Reality
Lunde flagged that LEO ranked in the bottom quartile of top 100 tokens by trading volume, with ownership concentrated among a few holders.
Current market data showed LEO with approximately $7 million in 24-hour trading volume against its $8 billion market capitalization, confirming the illiquid market structure that Lunde emphasized in his analysis.
This illiquidity introduced substantial noise into the interpretation of the premium.
LEO historically tended to stagnate around dollar-denominated support and resistance areas rather than tracking Bitcoin-adjusted fair value with precision.
Premiums could overshoot significantly when positioning was one-directional, but could also compress violently if even modest supply distribution occurred.
The 60% premium created an apparent short-selling opportunity for traders who believed current pricing reflected speculation rather than credible information about transfer timing.
However, the same illiquidity that allowed premiums to expand could create brutal squeezes for shorts if a confirmed transfer announcement triggered reflexive buying.
Lunde treated LEO as a relative-value trade, buying at or below implied fair value and selling when premiums expanded, a strategy that had proven effective for accumulating Bitcoin over the past year.
The central ambiguity remained whether LEO’s current premium signaled that market participants possessed credible information about imminent Bitcoin transfer, or whether thin order books and concentrated positioning simply allowed the token to drift away from fundamental anchors.
If Bitfinex ultimately executed its stated buy-and-burn strategy, approximately 75,000 BTC would flow back into markets over 18 months, equivalent to roughly 139 BTC per day.
This is a meaningful but not catastrophic supply addition compared to distributions from long-term holders and exchange-traded funds over recent months.