On February 8, the United States Department of Justice (DOJ) provided a news release detailing their largest financial seizure ever executed: $3.6 billion worth of bitcoin stolen from the platform Bitfinex.
New York couple Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, have already appeared in court to face preliminary legal proceedings.
DOJ Deputy Attorney General Lisa O. Monaco commented: “Today’s arrests 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.”
According to the news release: “Lichtenstein and Morgan allegedly conspired to launder the proceeds of 119,754 bitcoin that were stolen from Bitfinex’s platform after a hacker breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions. Those unauthorized transactions sent the stolen bitcoin to a digital wallet under Lichtenstein’s control. 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.”
The release explained in part how the seizure was conducted: “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 official affidavit summarizes the numerous obfuscation techniques that Lichtenstein and Morgan devised to retrieve and launder the money. “Chain hopping” was deployed, which entails transferring cryptocurrency through a network of different exchanges, making it difficult to trace where the money will ultimately land. The couple also siphoned the funds through multiple legitimate American businesses, furthermore attempting to evade the activation of any financial red flags.
Federal Bureau of Investigation (FBI) Deputy Director Paul Abbate said the seizure showed that the Bureau has the capacity to bring even the most clever of criminals to justice.
“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead,” Abbate declared. “Thanks to the persistent and dedicated work of our investigative teams and law enforcement partners, we’re able to uncover the source of even the most sophisticated schemes and bring justice to those who try to exploit the security of our financial infrastructure.”
Lichtenstein and Morgan could be punished with decades of prison time if convicted of both conspiracy to commit money laundering and conspiracy to defraud the United States.
As of press time, the married couple had not responded to requests for comment regarding the legal proceedings.
Specific Bitfinex hacking charges are additionally pending.