The FBI arrested a New York couple for allegedly conspiring to launder billions in stolen cryptocurrency during the 2016 hack of a virtual currency exchange that is now worth a whopping $4.5 billion.
The find was a record-shattering amount of stolen currency by the Justice Department in the form of digital currency or otherwise. They managed to seize around $3.6 billion in cryptocurrency linked to that hack which will be returned to its rightful owners.
Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31 have not been publicly linked to the actual hack while the investigations are still going on. They have been accused of laundering the $3.6 billion through a series of complicated financial transactions and diverting unspecified millions to accounts that they controlled. Both will formally appear in the federal court at 3 p.m. EST in Manhattan.
According to Deputy Attorney General Lisa Monaco, “Today’s arrests, and the Department’s largest financial seizure ever, 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.”
Lisa Monaco said in a statement, “Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter the form it takes.”
The couple conspired to launder the proceeds of 119,754 bitcoin stolen from Bitfinex’s platform after a hacker breached the currency exchange’s systems and initiated more than 2,000 unauthorized financial transactions. According to the criminal complaint, these unauthorized transactions sent the stolen cryptocurrency to a digital wallet under Lichtenstein’s control.
Over the next five years, around 25,000 of these stolen bitcoins were transferred out of Lichtenstein’s wallet via an elaborate series of money laundering transactions. This ended with some of the stolen funds deposited in financial accounts controlled by Lichtenstein and Morgan.
The Justice Department official explained, “Millions were cashed out into currency,” and used to purchase gold and NFTs, or Non-Fungible Tokens that may include valuable works of art or music.
Bitfinex in a statement said, “We’re pleased that the DOJ has recovered a significant portion of the bitcoin stolen during the 2016 hack. We have been cooperating extensively with the DOJ since its investigation of this incident began. We appreciate the dedication and hard work by the DOJ team that led to this great success, and we will continue to support their efforts.”
The couple has been charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and conspiracy to defraud the United States, which carries a maximum sentence of five years in prison.
The investigations were carried out by multiple agencies led by the Internal Revenue Service’s Cyber Crimes Unit, the FBI’s Chicago Field Office and the Department of Homeland Security’s investigations division. They were also assisted by the Ansbach Police Department in Germany.
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