Ilya “Dutch” Lichtenstein and wife Heather Rhiannon Morgan plead guilty to the 2016 Bitfinex hack, stealing and laundering over 119,756 Bitcoin.
Key Points
- Ilya “Dutch” Lichtenstein and wife Heather Rhiannon Morgan plead guilty to the 2016 Bitfinex hack.
- Lichtenstein stole and laundered over 119,756 Bitcoin valued at $3.4 billion.
- They used various methods, including cryptocurrency mixing services and converting crypto into gold coins buried to hide their tracks.
- Lichtenstein faces up to 20 years, Morgan up to 5 years; 95,000 BTC worth $3.6 billion seized, largest financial seizure in history.
The mystery surrounding the 2016 Bitfinex hack has finally been put to rest as the two main culprits involved in the crime pleaded guilty in a federal court. Ilya “Dutch” Lichtenstein, the mastermind behind the hack, admitted to stealing and laundering the funds, while his wife, Heather Rhiannon Morgan, confessed to being involved in the money laundering conspiracy.
Power couple Razzlekhan and spouse convicted in massive $4.5bn Bitcoin laundering scheme.
1. Husband and wife cyber-crime team pleaded guilty to laundering $4.5bn of stolen Bitcoin.
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Details of the Hack and Money Laundering
Lichtenstein used sophisticated hacking tools and techniques to infiltrate Bitfinex’s network, resulting in the theft of more than 119,756 Bitcoin. At the time, the stolen Bitcoin was worth around $71 million, but it has now skyrocketed to a value of $3.4 billion.
After the hack, Lichtenstein enlisted the help of his wife, Morgan, to launder the stolen funds and cover his tracks. They employed various methods, including fictitious identities, darknet markets, chain hopping, and cryptocurrency mixing services. Notably, certain popular cryptocurrency mixers, such as Blender and Tornado Cash, have already faced sanctions from the U.S. Treasury Department.
In addition to laundering the funds, Lichtenstein also converted some of the stolen cryptocurrency into physical gold coins, which were later buried by Morgan. Law enforcement officials have now discovered the location of these buried assets. To further obscure their illicit activities, Lichtenstein converted some of the stolen crypto into cash through intermediaries during his trips to Ukraine and Russia. He physically obtained the cash from addresses in both countries and deposited it into U.S. accounts for retrieval in New York City.
Sentencing and Asset Seizure
Lichtenstein, the main perpetrator behind the hack, could face a maximum prison sentence of 20 years. Morgan, his wife, may receive a maximum sentence of 5 years for her involvement in the money laundering conspiracy.
The defendants were arrested in February 2022, and the government managed to seize the majority of the stolen Bitcoin—95,000 BTC. At the time of the seizure, the value of the recovered assets amounted to $3.6 billion, making it the largest financial seizure in history. Bitfinex, the targeted exchange, expressed its gratitude for the recovery efforts conducted in collaboration with the Department of Justice, stating that these efforts have successfully restored customers’ funds.
“After seven years, those efforts have come to fruition,” the company said.
This conviction marks a significant victory in combating cybercriminals and protecting the integrity of the cryptocurrency industry. The prosecution and sentencing of both Lichtenstein and Morgan send a strong message that hacking and money laundering schemes will not go unpunished.
