The US Department of Justice (DOJ) seized more than 94,000 bitcoins believed to have been stolen in the 2016 Bitfinex crypto exchange hack and arrested a married couple suspected of laundering the money, the ministry announced today. The couple – Ilya Lichtenstein, 34, and Heather Morgan, 31 – face charges of conspiracy to launder money and defraud the US government. Facing up to 25 years in prison if convicted, they are expected to appear for the first time in federal court in Manhattan later today.
The seizure of assets, worth $3.6 billion at bitcoin’s current price, is the largest in Justice Department history, officials said. However, they have not recovered all of the funds lost in the 2016 hack – the 119,754 bitcoins allegedly stolen in total are now worth $4.5 billion.
Although Morgan and Lichtenstein have not been formally charged with carrying out the hack, prosecutors said they discovered the suspects because the bitcoins were sent to a digital wallet controlled by Lichtenstein. The pair obtained the coins after a hacker broke into Bitfinex’s systems, initiating more than 2,000 illegal transactions, the DOJ said.
Both Lichtenstein and Morgan are deeply involved in the tech startup ecosystem, according to their Linkedin profiles. Liechtensteina dual American and Russian citizen nicknamed “Dutchman”, founded a Y Combinator-backed sales software company called MixRank. Morgan is the founder and CEO of B2B sales startup SalesFolk, where Lichtenstein has served as an advisor since 2014, according to Crunchbase data and LinkedIn. Lichtenstein also serves as a mentor at venture capital firm 500 Startups and an advisor at Ethereum wallet provider Endpass, according to his profile, while Morgan has written articles for Forbes and Inc.
More than a third of the stolen bitcoins were transferred out of Lichtenstein’s wallet “via a complicated money laundering process” involving the creation of accounts with false names and the conversion of bitcoins into other more private digital currencies like Monero, a process known as “chain-hopping”. .” The 94,000 bitcoins that were not laundered remained in the wallet that was used to store the proceeds of the hack, which is how agents say they were able to recover them after conducting an extensive search online through court-authorized warrants.
Bitfinex said in a report today that he would work with US officials to try to return the stolen funds to their rightful owners.
“Today federal law enforcement is once again demonstrating that we can track money through the blockchain and that we will not allow cryptocurrency to be a safe haven for money laundering. money or an area of anarchy within our financial system,” Assistant Attorney General Kenneth A. Polite Jr. of the DOJ’s Criminal Division said in the agency’s statement.