Ilya Lichtenstein, who pleaded guilty to his role in the Bitcoin hack of cryptocurrency exchange Bitfinex in 2016, has been sentenced to five years in prison, as announced Thursday by the U.S. Department of Justice (DOJ).
Lichtenstein was convicted for his involvement in the money laundering conspiracy for stealing approximately 120,000 Bitcoin from the exchange.
Couple’s Bitcoin Hack and Money Laundering Operation Exposed
Court documents reveal that Lichtenstein used “advanced hacking tools” and techniques to breach Bitfinex’s network. Once inside, he fraudulently authorized more than 2,000 transactions, transferring 119,754 Bitcoin to a cryptocurrency wallet he controlled.
To evade detection, Lichtenstein took steps to cover his tracks by deleting credentials and logs from the Bitfinex network that could have exposed his activities to law enforcement. After the hack, he enlisted the help of his wife, Heather Morgan, to launder the stolen money.
The DOJ announced that the money laundering scheme employed by Lichtenstein and Morgan was ‘particularly advanced’. They used fictitious identities to create online accounts, automated transactions with computer programs and deposited the stolen funds into various accounts linked to darknet markets and cryptocurrency exchanges.
The couple also engaged in “chain hopping,” a practice of converting Bitcoin into other cryptocurrencies to obscure its origins. Moreover, they used cryptocurrency mixing services to further conceal the illegal funds and even exchange some stolen Bitcoin for gold coins.
On August 3, 2023, both Lichtenstein and Morgan pleaded guilty to one count of conspiracy to commit money laundering. In addition to his prison sentence, Lichtenstein was ordered to serve three years of supervised release. Morgan’s sentencing is scheduled for November 18.
Bitfinex Named Main Victim of BTC Theft
Recently, the United States District Court for the District of Columbia ruled in favor of Bitfinexcementing the exchange as the only entity entitled to restitution for the nearly 120,000 BTC stolen in the hack eight years ago.
This legal victory led to the US government to acknowledge Bitfinex as the main victim of the incident, while acknowledging that “numerous individuals and groups” may have been affected by the theft.
Despite this recognition, the government faces challenges in identifying all affected account holders. To solve this problem, there are plans to use the Ministry of Justice website dedicated to ‘big cases’.
The new site will reportedly provide “essential notices” and a streamlined process for individuals to submit claims regarding their financial losses.
While the government does not categorize these individual account holders as ‘victims’ under existing legal definitions, it does want to provide them with a platform to assert their claims using alternative reporting methods.
At the time of writing, the market’s largest cryptocurrency, Bitcoin, is trading at $88,520, up 16% per week, although it has retreated from its levels over the past 48 hours. highest ever from $93,250 on Wednesday.
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