Feds Arrest Couple for Allegedly Conspiring to Launder $4.5B Worth of Bitcoin Stolen in Bitfinex Hack

The United States Justice Department recently disclosed that it arrested a New York couple for allegedly conspiring to launder billions of dollars worth of bitcoin that was stolen during the infamous Bifinex hack of 2016.

Feds Seize $3.6B in BTC Stolen From Bitfinex

While the whole stolen funds was worth around  $4.5 billion when the platform was hacked, the US Feds were able to seize over $3.6 billion after the arrest.

The husband (Ilya Lichtenstein, 34) and wife (Heather Morgan, 31) are both from New York, and were arrested in Manhattan on Tuesday morning.

The couple were scheduled to make their initial appearances in federal court that same day at 3:00 p.m. in the U.S. District Court for the Southern District of New York.

While it is still uncertain who would be representing the couple in the case, they are both charged with conspiracy to commit money laundering, a criminal offense that attracts a maximum sentence of 20 years in prison, in addition to a conspiracy to defraud in the United States, another offense with a maximum sentence of five years in prison.

$72 Million Turns $4.5 Billion

Known as one of the biggest hacks in crypto history, popular trading platform Bitfinex was hacked in 2016 with about 119,755 BTC carted away by the hackers after breaching Bitfinex’s systems and initiating more than 2,000 unauthorized transactions. 

At the time of the hack, the bitcoins were worth about $72 million, but the stash has grown tremendously to a massive $4.5 billion at current market prices.

Interestingly, in 2020, when the value of the stolen BTC increased to $1.3 billion, Bifinex announced that it would dish out $400 million in rewards to anyone who help the company to recover the loot.

It’s been over five years since the hack, but the crypto industry has been diligently following the movements of the funds, thanks to crypto transactions tracking platforms like Whale Alert.

Following the hack, some of the stolen funds were reportedly sent to a crypto wallet under Lichtenstein’s control. About 25,000 BTC were transferred out of Lichtenstein’s wallet and laundered into other financial accounts controlled by the couple. 

Meanwhile, the remaining 94,000 bitcoins still stayed in the original wallet that was used to receive and store the stolen bitcoins from the hack.

Biggest Financial Seizure Ever

With the IRS-CI Washington, D.C. Field Office’s Cyber Crimes Unit, the FBI’s Chicago Field Office, and HSI-New York leading the investigation, several online accounts controlled by the couple have been seized and the private key to the digital wallet that received the stolen bitcoin was discovered.

With the private key, the authorities were able to seize and recover about 94,000 BTC which was valued at over $3.6 billion at the time of seizure.

Deputy Attorney General Lisa O. Monaco said, “Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals.” 

She continued, “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”

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