Ilya Lichtenstein, who was responsible for the infamous 2016 Bitfinex hack, has been sentenced to five years in prison for his role in laundering over $10.5 billion worth of stolen Bitcoin. The U.S. Department of Justice (DoJ) revealed that Lichtenstein used advanced hacking techniques to gain unauthorized access to Bitfinex’s network and fraudulently authorized over 2,000 transactions. These transactions led to the theft of nearly 120,000 bitcoins, which Lichtenstein then moved to a wallet under his control. His wife, Heather Rhiannon Morgan, also pleaded guilty to the same charges and was arrested alongside Lichtenstein in February 2022. She is set to be sentenced on November 18, 2024.
The couple employed a sophisticated money-laundering scheme to disguise the origins of the stolen funds. They utilized fake identities to open online bank accounts, deposited the stolen bitcoin into darknet markets, and converted the funds through various cryptocurrency exchanges. The laundering process also involved techniques such as “chain hopping,” which allowed the stolen funds to be converted into different cryptocurrencies before they were moved through mixing services like Bitcoin Fog. Some of the funds were eventually turned into fiat currency, with portions also being used to purchase gold coins.
Lichtenstein’s use of Bitcoin Fog was a key factor in tracing the flow of the stolen funds. A blockchain analytics firm, Chainalysis, uncovered that Lichtenstein and Morgan had purchased Walmart gift cards using the stolen bitcoin at an unnamed virtual currency exchange. This detail ultimately led to the authorities obtaining a search warrant for their home, where investigators uncovered vital evidence. They found files detailing the cryptocurrency addresses used to launder the funds, private keys, and falsified information used to open cryptocurrency exchange accounts.
The investigation also revealed that Lichtenstein orchestrated the hack, with Morgan being a willing but secondary participant in the scheme. Prosecutors emphasized that while Morgan was fully responsible for her actions, Lichtenstein had masterminded the operation without initially involving her in the full extent of the crime. In addition to the sentencing of Lichtenstein, the case highlights the ongoing issue of cryptocurrency-related financial crimes, with similar cases continuing to unfold globally. Meanwhile, another individual, Daren Li, was recently involved in a separate money-laundering case, further demonstrating the scale of such criminal activity in the crypto world.
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