- Bitfinex hacker Ilya Lichtenstein received a 5-year term for laundering $8B in Bitcoin.
- The five-year sentence brought to a close a $4.5 billion Bitcoin heist.
More seriously, however, Ilya Lichtenstein, the brains behind the masterminds who hacked Bitfinex in 2016, got five years in prison for stealing and laundering a total of 120,000 Bitcoins-then worth $71.8 million in 2016, but valued today to over $8 billion-which makes it one of the biggest crypto thefts in history.
Lichtenstein is then convicted after pleading on a charge of conspiracy with his spouse and accomplice, Heather Morgan, to launder money.IRS agents found that the couple executed one of the most sophisticated schemes ever found in crypto laundering, but its operation was arrested after a long investigation in February 2022.
Sophisticated Laundering Scheme Unveiled
In 2016, he exploited vulnerabilities in the Bitfinex system and stole 119,754 Bitcoins by using over 2,000 unauthorized transactions to a private wallet, deleting access logs and credentials afterward to conceal his crimes.
Indeed, after hacking into the Great Masters account, Lichtenstein and Morgan used the above-sophisticated laundering techniques to transfer the siphoned funds. This included techniques such as chain hopping, converting Bitcoin to other cryptocurrencies, and fictitious identities for account opening. Darknet markets and U.S.-based business accounts channeled the funds to make them appear clean. The perpetrators even minted some of the stolen funds into gold coins.
Despite all the hard work, the investigators followed the money laundering trail very diligently. Authorities apprehended Lichtenstein and Morgan on February 28, 2022, and recovered most of the stolen Bitcoin.
Lichtenstein was sentenced to five years in prison, but Morgan, alias Razzlekhan, is scheduled to be sentenced on November 18, 2024. Prosecutors have recommended an 18-month prison term for the offense.
This case serves as an example of how cryptocurrency crimes change, with the capability to trace and retrieve stolen assets enhanced by law enforcement.
Bitfinex is still working together with the authorities to find the remaining stolen money. In addition, it improved security measures to protect it from such hacks in the future. This massive crypto theft sentencing sets precedence on how the authorities should handle crypto-related crimes going forward.
