WASHINGTON – FBI agents arrested a New York couple this morning for allegedly conspiring to launder most of the cryptocurrency stolen during the 2016 hack of a virtual currency exchange that is now worth a whopping $4.5 billion.
Justice Department officials called it a record-shattering amount of stolen currency – digital or otherwise – and said that they have seized at least $3.6 billion in cryptocurrency linked to that hack that they will now try to return to its rightful owners.
So far, authorities have not publicly linked Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, to the current hack of the cryptocurrency, saying the investigation is ongoing. They are accused of laundering the $3.6 billion through a series of complicated financial transactions, and diverting unspecified millions to accounts that they controlled.
The two are scheduled to make their initial appearances in federal court at 3 pm EST in Manhattan.
“Today’s arrests, and the Department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa Monaco.
“In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions,” 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.”
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division said the arrests should send a signal to cybercriminals that federal authorities are now sophisticated enough to be able to follow money through the blockchain that often camouflages the digital transfer of money. It also shows, Polite said, “that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system.”
According to the court documents, Lichtenstein and Morgan allegedly conspired to launder the proceeds of 119,754 bitcoin that were stolen from Bitfinex’s platform after a hacker breached the currency exchange’s systems and initiated more than 2,000 unauthorized financial transactions. Those unauthorized transactions, a criminal complaint alleges, sent the stolen cryptocurrency to a digital wallet under Lichtenstein’s control.
Then, over the next five years, approximately 25,000 of those stolen bitcoins were transferred out of Lichtenstein’s wallet via an elaborate series of money laundering transactions that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan.
Over the years, one senior Justice Department official said, “Millions were cashed out into currency,” and were used to purchase gold and NFTs, or Non-Fungible Tokens that could include valuable works of art or music.
Authorities would not say where they believe Lichtenstein and Morgan got the money, or where they spent the money that was converted into currency.
In a statement, Bitfinex said, “We’re pleased that DOJ has recovered a significant portion of the bitcoin stolen during the 2016 hack. We have been cooperating extensively with 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.”
Specifically, Lichtenstein and Morgan are 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 multi-agency investigation was 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. Authorities said they were also assisted by the Ansbach Police Department in Germany.
www.usatoday.com
George is Digismak’s reported cum editor with 13 years of experience in Journalism