DoJ Seizes More Than Half of Stolen BTC from 2016 Bitfinex Hack
According to a press release by the Department of Justice (DoJ) on Tuesday (February 8, 2022), U.S. authorities arrested a New York couple, Ilya Lichtenstein, and his wife Heather Morgan. They were accused of trying to launder nearly 120,000 BTC connected to the Bitfinex hack.
Back in August 2016, hackers stole 119,756 BTC–worth $72 million at the time of the hack, but now valued at $5.26 billion. The rogue actors stole the funds from Bitfinex users’ segregated wallets, carrying out the theft after initiating over 2,000 unauthorized transactions.
These transactions sent the stolen crypto to a wallet controlled by Lichtenstein. According to the DoJ report, 25,000 of the total stolen Bitcoin were transferred from Lichtenstein’s wallet through a “complicated money laundering process” and deposited into financial accounts controlled by the couple. (Ever since the Bitfinex incident, there have been several reports of hackers moving small amounts of BTC in multiple transactions.)
Meanwhile, the remaining stolen funds (over 94,000 BTC) remained in Lichtenstein’s wallet. However, Federal agents were able to seize the funds, after obtaining a search warrant from the court to access files containing private keys. The BTC was worth $3.6 billion at the time of seizure but is now valued at $4.12 billion at time of writing. The hackers had moved 94,643 BTC in over 20 transactions. The funds were moved from a wallet linked to the Bitfinex theft to an unknown wallet. One of the transactions involved a single transfer of 10,000 BTC.
“Largest Financial Seizure Ever”
The DoJ announcement noted that Lichtenstein and Morgan used “sophisticated laundering techniques” to wash the stolen BTC. Some of the methods employed included: depositing the illicit Bitcoin into exchanges and darknet markets before withdrawing the BTC, as a way to obfuscate the transaction history; deploying computer programs to automate transactions; and using fictitious identities for online accounts.
According to Lisa Monaco, Deputy Attorney General:
“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals. 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.”
Also commenting on the case was the Homeland Security Investigations (HSI) Acting Executive Associate Director Steve Francis, who said:
“Financial crime strikes at the core of our national and economic security. With a hack of this magnitude, public and private sector collaboration is crucial to ensure continued consumer confidence in our financial system.”
The New York couple have been charged with conspiracy to commit money laundering and conspiracy to defraud the United States. Both charges carry a maximum prison sentence of 20 years and five years respectively.
