A couple involved in Bitfinex 2016 hack has pleaded guilty to the charges, and the husband reportedly admits that he was the individual behind the hack that siphoned nearly 120,000 Bitcoin, worth $4.5 billion, from the cryptocurrency exchange.
According to a CNBC report on Thursday, August 3, Ilya Lichtenstein, 35, revealed that he was the Bitfinex hacker while pleading guilty to laundering stolen Bitcoin charges in a Washington DC court. His wife, Heather Morgan, 33, also known as Razzlekhan, also pleaded guilty to one count of money laundering conspiracy and one count of conspiracy to defraud the United States. Before this admission, the identity of the hacker(s) was merely speculation, and the couple was not charged with the Bitfinex hack.
New York man admits to Bitfinex hack during guilty plea to bitcoin money laundering https://t.co/wRjkHnCGOc
— CNBC (@CNBC) August 3, 2023
Per a press release by the US Department of Justice (DOJ) on Thursday, August 3, “Lichtenstein pleaded guilty to conspiracy to commit money laundering, which carries a maximum penalty of 20 years in prison.” Heather Morgan could face five years in prison.
Bitfinex Hacker and Wife Plead Guilty to Money Laundering Conspiracy Involving Billions in Cryptocurrencyhttps://t.co/p0g6Di9j0R
— Criminal Division (@DOJCrimDiv) August 3, 2023
The Story of the Bitfinex Hack
Now with a name linked to the Bitfinex hack, the whole story of this infamous hack can be told. The hack happened 7 years ago, on August 2, 2016, when Ilya Lichtenstein breached the exchange’s system and initiated over 2,000 unauthorized transactions to send 119,754 BTC to wallets controlled by himself. The value of stolen BTC stood roughly at $70 million at that time.
Lichtenstein then returned to the exchange’s systems again to delete the access credentials and other log files to cover his tracks. He then enlisted the help of his wife, Heather Morgan, to launder the stolen Bitcoin. Over five years, the couple transferred approximately 25,000 stolen Bitcoins through complicated money laundering techniques.
Per the DOJ press release, these techniques include using fictitious IDs to set up online accounts, using crypto mixers, converting Bitcoin to other privacy-focused assets, and transacting funds to and from crypto exchanges and darknet markets to break the trails of funds.
They also “exchange a portion of the stolen funds into gold coins, which Morgan then concealed by burying them.” The site is now known to law enforcement. They reportedly traveled to Ukraine and Kazakhstan to convert some funds to cash, which was then mailed to Russia and t deposited in US bank accounts.
The authorities arrested the couple in February 2022 and seized the remaining 95,000 Bitcoin from wallets under hackers’ control. The recovered funds were valued at approximately $3.6 billion at the time of the seizure. Per the August 3 press release, the government has seized another approximately $475 million tied to the hack since their arrests.
