Nearly 120,000 bitcoins were stolen in the 2016 Bitfinex cryptographic platform hack.
US authorities arrested two people accused of conspiring to launder $ 4.5 billion worth of cryptocurrencies – yes, billions – stolen during the 2016 Bitfinex currency exchange hack.
Ilya Lichtenstein and his wife Heather Morgan conspired to launder the proceeds of nearly 120,000 stolen bitcoins, according to court documents cited by the DOJ, which were transferred to a Liechtenstein-controlled digital wallet. Since the initial hack, approximately 25,000 bitcoins have been removed from this wallet and laundered through a complex series of transactions, and the resulting funds are deposited into regular Liechtenstein and Morgan accounts.
However, the program was discontinued in January when federal agents were able to access and decrypt a file stored in a Liechtenstein cloud storage account containing a list of over 2,000 addresses and virtual currency keys. Further analysis confirmed that nearly all addresses were directly related to hacking; More than 94,000 bitcoins were subsequently seized. Bitcoin’s value was over $ 3.6 billion at the time of the seizure, making it the largest financial recovery in the history of the Justice Department.
“Today, federal law enforcement is proving once again that we can track money on the blockchain and not allow cryptocurrency to be a haven for money laundering or an area of anarchy in our financial system,” added Attorney General Kenneth A. Jr. in a statement. “Today’s arrests show that we will take a firm stand against those who claim to use virtual currencies for criminal purposes.”
The Justice Department complaint also includes some illustrations of how the scheme was implemented. The graphs are simple and difficult to read in some places, but they give an idea of the scale and complexity of the recycling operation:
In a separate statement, Bitfinex said it has cooperated “extensively” with the DOJ since the start of the investigation and will continue to do so after the arrests. It is also working to “establish our rights to return stolen bitcoins”.
Lichtenstein’s LinkedIn feed describes him as “a tech entrepreneur, programmer, and investor interested in blockchain technology, automation, and big data.” He also lists him as the founder of Endpass, a blockchain-based “decentralized identity platform”. The site is currently offline but is still visible via the Wayback Machine.
Life before Morgan’s arrest seems a little more colorful. She also appears to be known as Razzlekhan, a rapper who describes herself as “like Genghis Khan, but with more panache”.
Here is the video of its Versace Bedouin 2019 release:
“Razz isn’t just a rapper. She is also a software CEO, author, economist, and many other contradictory ones (listen to find out), “she reads the website razzlekhan.com.” Although Razz has many rappers she draws inspiration from, including the South African rap duo, Dies Antwoord, Tierra Whack, and rapper Mickey Avalon, also finds great inspiration in the creative works of Salvador Dali, Diane Arbus, Hunter S Thompson, and Roald Dahl, and Charles Bukowski. “
She also provides occasional financial advice.
Lichtenstein and Morgan face up to 20 years in prison for conspiracy to money laundering and conspiracy to defraud the US government, which carries a maximum sentence of five years. His first court appearance today.