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The individual responsible for stealing and laundering billions of dollars in Bitcoin from the Bitfinex exchange has recently been sentenced to five years in prison. Ilya Lichtenstein, alongside his rapper wife Heather Morgan, pleaded guilty last year to laundering an astonishing $4.5 billion worth of Bitcoin that was recovered during the investigation.
Details of the Hacking Incident
According to court documents cited by the U.S. Justice Department, Lichtenstein breached Bitfinex’s network in 2016 using advanced hacking tools and methodologies. The court revealed that he fraudulently authorized over 2,000 transactions, transferring a total of 119,754 Bitcoin to a cryptocurrency wallet under his control.
Lichtenstein reportedly spent several months trying to infiltrate Bitfinex’s infrastructure and secure the permissions necessary for such a significant breach. From January 2017 until their arrest in February 2022, he and Morgan attempted to liquidate portions of the stolen Bitcoin.
Legal Proceedings and Sentencing
In October, U.S. prosecutors made a case for a longer sentence for Lichtenstein, citing his involvement in one of the largest cryptocurrency hacks recorded. They recommended an additional three years of supervised release upon completion of his prison term. Ultimately, Lichtenstein was sentenced to three years of supervised release following his prison time. His wife, Morgan, is set to face sentencing on November 18.
Investigation Overview
The case concludes a lengthy seven-year investigation that involved several U.S. agencies, including the IRS-Criminal Investigations unit, the FBI, Homeland Security Investigations, and the blockchain forensics firm TRM Labs. Officials from the IRS described Lichtenstein’s money laundering techniques as some of the most sophisticated they had encountered.
Lichtenstein and Morgan utilized a variety of complex laundering strategies, such as creating fictitious identities to establish online accounts, which was detailed in the official statements from the court.
Judge’s Remarks and Context
U.S. District Judge Colleen Kollar-Kotelly remarked on the magnitude of the case, stating, “this is so massive, it is not comparable to other crypto crimes.” This comment reflects the unprecedented scale of Lichtenstein’s illicit activities in the realm of cryptocurrency.
Past Criminal Activity
Interestingly, while Lichtenstein did not have a significant criminal background before his arrest in connection with the Bitfinex hack, this was not his first encounter with illegal activities. Prosecutors revealed that in 2015, he had illegally transferred a small quantity of PayCoin, during which he was experimenting with various forms of hacking and financial fraud.
Additionally, prior to 2016, Lichtenstein managed to acquire credentials for another virtual currency exchange’s application programming interface (API) and pilfered approximately $200,000, as documented in the prosecutorial memos.
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