After Bitfinex hack, a New York couple attempts to launder billions in bitcoin.
The U.S. Department of Justice (DOJ) has announced that Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, both of New York, have been arrested for their involvement in allegedly conspiring to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, based in Hong Kong, which today is valued at approximately $4.5 billion. The agency has been able to seize over $3.6 billion in cryptocurrency linked to the hack to date. According to court documents, Lichtenstein and Morgan laundered 119,754 bitcoin that were stolen from the company’s compromised platform and more than 2,000 unauthorized transactions were made. Those were passed along to Lichtenstein’s digital wallet.
Over the last five years, authorities reported, 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, more than 94,000 in bitcoin, remained in the wallet Agents were able to gain access to files controlled by Lichtenstein, which contained the private keys required to access the funds.
“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 O. 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.”
The criminal complaint alleges the couple made fictitious names to set up online accounts, used computer programs to automate transactions, deposited the stolen proceeds into accounts at a variety of virtual currency exchanges and darknet markets and converted bitcoin to other forms of virtual currency.
“Today, federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes.”
“In a methodical and calculated scheme, the defendants allegedly laundered and disguised their vast fortune,” said Chief Jim Lee of IRS-Criminal Investigation (IRS-CI). “IRS-CI Cyber Crimes Unit special agents have once again unraveled a sophisticated laundering technique, enabling them to trace, access and seize the stolen funds, which has amounted to the largest cryptocurrency seizure to date, valued at more than $3.6 billion.”
Lichtenstein and Morgan are charged with conspiring to commit money laundering, which carries a penalty 20 years behind bars and conspiring to defraud the United States, which carries a maximum sentence of five years in prison.
“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,” said FBI Deputy Director Paul M. Abbate. “Thanks to the persistent and dedicated work of our FBI 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.”