Over $3.6 billion dollars worth of Bitcoin linked to the Bitfinex hack of 2016 has been seized, according to a statement from the US Justice Department.
Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, were arrested on Tuesday for allegedly trying to launder the Bitcoin stolen from Bitfinex in a series of sophisticated strategies. The two suspects’ connection to the hack, beyond simply laundering the funds, is currently unknown.
According to court documents, Lichtenstein and Morgan are accused of trying to launder 119,754 BTC stolen from Bitfinex, and each face a charge of 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. Both are currently out on bail.
“In a methodical and calculated scheme, the defendants allegedly laundered and disguised their vast fortune,” said Chief Jim Lee of IRS-Criminal Investigation (IRS-CI). “IRS-CI Cyber Crimes Unit special agents have once again unraveled a sophisticated laundering technique, enabling them to trace, access and seize the stolen funds, which has amounted to the largest cryptocurrency seizure to date, valued at more than $3.6 billion.”
Despite holding the keys to $4 billion in stolen crypto, the two suspects did not live low profile lives. Lichtenstein was a tech CEO with a very public personality while Morgan wrote for Forbes and had her own rap career.
Because of her quirky online presence, many in the crypto industry are skeptical of whether or not 31-year-old Morgan was capable of perpetrating such a crime with her partner, instead suggesting that other parties were involved.
Eric Wall, chief investment officer of Arcane Assets said that despite Morgan’s cringeworthy rap videos, Morgan still showed signs of intelligence and other social skills.
Commenting on a recent presentation that Morgan did on social engineering, Wall said,
“Heather is obviously not a dum-dum. This is clearly a presentation given by an intelligent person.
The way she speaks and reasons about her area of expertise shows that she has pretty decent social skills, a sense of humor and humility.”
While details of the Bitfinex hack will likely be exposed in the coming weeks, the seizure, which is the biggest in history, is a reminder that Bitcoin is not a bullet proof vest for criminals and money launderers. Ever since the initial hack, blockchain sleuths have been able to track where the BTC was headed the entire time, even if it was inaccessible. Ultimately, the Feds were able to get a warrant to access one of Lichtenstein’s online accounts that held the keys to the wallet where the Bitcoin was being stored.
“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead,” said FBI Deputy Director Paul M. Abbate. “Thanks to the persistent and dedicated work of our FBI Investigative teams and law enforcement partners, we’re able to uncover the source of even the most sophisticated schemes and bring justice to those who try to exploit the security of our financial infrastructure.”