Justice Department Seize Over $3.6 Bln In Stolen Bitcoin Related To Bitfinex Hack

The U.S. Department of Justice on Tuesday said it has arrested two people and seized over $3.6 billion in cryptocurrency linked to the 2016 hack of Bitfinex.

Justice Department has arrested Ilya Lichtenstein and his wife, Heather Morgan, both of New York.

The two individuals were arrested on Tuesday morning in Manhattan due to an alleged conspiracy to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, a virtual currency exchange, presently valued at about $4.5 billion. The law enforcement has seized over $3.6 billion in cryptocurrency linked to that hack.

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

Bitfinex is a cryptocurrency exchange owned and operated by iFinex Inc registered in the British Virgin Islands. Their customers’ money has been stolen or lost in several incidents.

In August 2016, Bitfinex announced it had suffered a security breach. In that hack, the second-biggest breach of a Bitcoin exchange platform, 119,754 units of Bitcoin, which was about $72 million at the time, were stolen.

Over the last five years, approximately 25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan. The remainder of the stolen funds, comprising more than 94,000 bitcoin, remained in the wallet used to receive and store the illegal proceeds from the hack.

After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex. The recovered bitcoin was valued at over $3.6 billion at the time of seizure.

Lichtenstein and Morgan are charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and conspiracy to defraud the United States, which carries a maximum sentence of five years in prison.

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