U.S. Justice Department boasts US$3.6 billion crypto bust

U.S. authorities seized billions of dollars worth of stolen crypto and charged a New York couple with money laundering in connection with the hack of trading platform Bitfinex in 2016.

The U.S. Department of Justice (DoJ) said its agents seized stolen Bitcoin valued at more than US$3.6 billion, representing its largest ever financial seizure.

In 2016, Bitfinex was hacked and almost 120,000 Bitcoin were stolen. At the time, the stolen crypto was valued at approximately US$71 million, but it’s currently worth more than US$4.5 billion.

The DoJ also charged a couple — Ilya Lichtenstein, 34, and Heather Morgan, 31, — with conspiracy to commit money laundering and conspiracy to defraud the U.S. government.

They are due to make their first appearance in a New York federal court today. The allegations have not been proven, and they are presumed innocent.

According to the government’s court filings, “Lichtenstein and Morgan allegedly conspired to launder the proceeds of 119,754 bitcoin that were stolen from Bitfinex’s platform after a hacker breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions.”

The government alleged that about 25,000 of the stolen Bitcoins were channeled through “a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan.”

That process allegedly included using fictitious identities to set up online accounts, automating transactions, funnelling the stolen crypto through accounts on a variety of exchanges and the darknet market, AlphaBay, and converting Bitcoin to other forms of crypto in an effort to disguise its origin.

The other 94,000 Bitcoin were seized on Jan. 31 after court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan gave federal agents access to the private keys to the digital wallet that directly received the crypto stolen from Bitfinex.

“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said deputy U.S. attorney general Lisa Monaco, in a release.

“In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions,” she added.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.