Because they only recovered a fraction of the bitcoin lost, so there wasn't enough bitcoin to be distributed. They wanted the equivalent price in cash, which se

Because they only recovered a fraction of the bitcoin lost, so there wasn't enough bitcoin to be distributed. They wanted the equivalent price in cash, which seemed like a more obtainable goal but still at the time was greater than what could be met by selling the 200K bitcoin they recovered. Who knows, maybe they thought they could get it from insurance or something like that. Of course, now that the 200k bitcoin are worth more than the 800k lost were at the time of the hack, they want more money.