Ilya Lichtenstein, who pleaded responsible to the 2016 hack of cryptocurrency inventory trade Bitfinex, has been sentenced to 5 years in jail, the U.S. Division of Justice (DoJ) introduced Thursday.
Lichtenstein was charged for his involvement in a cash laundering scheme that led to the theft of practically 120,000 bitcoins (valued at over $10.5 billion at present costs) from the crypto trade. Heather Rhiannon Morgan, his spouse, additionally pleaded responsible to the identical crimes final 12 months. They have been each arrested in February 2022. Morgan is scheduled to be sentenced on November 18.
“Lichtenstein, 35, hacked into Bitfinex’s community in 2016, utilizing superior hacking instruments and strategies,” the DoJ mentioned in a press assertion. “As soon as contained in the community, Lichtenstein fraudulently licensed greater than 2,000 transactions transferring 119,754 bitcoin from Bitfinex to a cryptocurrency pockets in Lichtenstein’s management.”
In addition to taking a string of actions to cowl up the tracks by deleting entry credentials and different log recordsdata from Bitfinex’s community, the couple is alleged to have used fictitious identities to arrange on-line banking accounts to launder the proceeds, depositing them in darknet markets and cryptocurrency exchanges.
The funds have been finally withdrawn, transformed to different cryptocurrencies (a method known as chain hopping), depositing a piece of the ill-gotten property into mixing providers like Bitcoin Fog, changing them to fiat foreign money and transferring to a U.S. checking account, and exchanging a portion of the crypto for gold cash.
The event comes days after Roman Sterlingov, the 36-year-old founding father of Bitcoin Fog, was sentenced to 12 years and 6 months in jail for facilitating cash laundering actions between 2011 and 2021. Earlier this 12 months, Lichtenstein had testified in courtroom that he had used Bitcoin Fog 10 instances to launder the digital property.
Blockchain analytics agency Chainalysis beforehand revealed how the couple’s buy of Walmart reward playing cards utilizing the stolen bitcoin at an unnamed digital foreign money trade finally proved to be their undoing, after it was discovered that the reward playing cards have been redeemed utilizing the retail big’s iPhone app below an account in Heather Morgan’s title.
“That enabled brokers to get a search warrant for Lichtenstein and Morgan’s house and cloud storage accounts, the place they discovered recordsdata containing particulars of the cryptocurrency addresses used to maneuver the stolen funds — together with their non-public keys — together with the false data used to open accounts at cryptocurrency exchanges and plans to amass pretend passports,” Chainalysis mentioned.
“That discovery enabled investigators to hint the move of funds in its entirety.”
Based on the Related Press, Morgan is a enterprise proprietor and author. She additionally adopted the alter ego Razzlekhan to carry out rap songs and document movies for her music. The pair had been dwelling in San Francisco on the time of the hack.
“Lichtenstein masterminded and orchestrated the Bitfinex hack with out telling [Morgan],” prosecutors mentioned. “He additionally initially solicited the defendant’s help with out explaining precisely what he was doing. The defendant was actually a keen participant and bears full accountability for her actions, however she was a lower-level participant.”
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The sentencing additionally follows a responsible plea from Daren Li, 41, for partaking in a prison scheme to launder $73.6 million stolen by cryptocurrency funding scams utilizing a community of shell corporations and worldwide financial institution accounts. Li was arrested again in April 2024 at Atlanta. He’s anticipated to be sentenced subsequent March.
“Li admitted that he conspired with others to launder funds obtained from victims by cryptocurrency scams and associated fraud,” the DoJ mentioned. “In furtherance of the conspiracy, he communicated together with his co-conspirators by encrypted messaging providers.”
“In an effort to conceal or disguise the character, location, supply, possession, and management of the fraudulently obtained sufferer funds, Li would instruct co-conspirators to open U.S. financial institution accounts established on behalf of shell corporations and would monitor the receipt and execution of interstate and worldwide wire transfers of sufferer funds.”
The funds have been subsequently deposited to monetary accounts below their management, after which they might be transformed to digital foreign money like Tether, and distributed to wallets owned by Li and his co-conspirators. Li faces a most penalty of 20 years in jail.
“Monetary criminals and the cash launderers who allow them wreak untold hurt, ruining lives within the course of,” mentioned U.S. Lawyer Martin Estrada for the Central District of California. “Traders must be diligent and on guard in opposition to anybody providing fast riches through new, unique investments. A wholesome dose of skepticism may stop monetary destroy down the highway.”
