New York couple arrested for stealing over $3.6 billion in Bitcoin

New York, New York - The US Department of Justice on Tuesday said it arrested two people and seized over $3.6 billion worth of cryptocurrency linked to the 2016 hack of the Bitfinex trading platform. It is the largest financial seizure in history.

A married couple was arrested and charged with fraud and money laundering on Tuesday in connection to the 2016 Bitfinex hack.
A married couple was arrested and charged with fraud and money laundering on Tuesday in connection to the 2016 Bitfinex hack.  © Collage: IMAGO/YAY Images & ZUMA Wire

Ilya Lichtenstein and his wife, Heather Morgan, were arrested in New York, the department said.

According to reports, Lichtenstein (34) is a tech entrepreneur, while his wife Morgan (31) is a former Forbes contributor and self-proclaimed "badass CEO and female rapper."

The two are accused of a conspiracy to launder cryptocurrency that was stolen during the huge 2016 hack of Bitfinex, a virtual currency exchange.

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"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. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes."

One of Morgan's rap music videos is now circulating on the internet, in which she's seen dancing on the steps of Wall Street in a dedication to "hackers, misfits, and all the unique people who pursue what they want."

The history of the heist

Cryptocurrency exchange Bitfinex suffered the second-largest security breach of a Bitcoin exchange platform ever in 2016, when $72 million was allegedly stolen by the married couple.
Cryptocurrency exchange Bitfinex suffered the second-largest security breach of a Bitcoin exchange platform ever in 2016, when $72 million was allegedly stolen by the married couple.  © IMAGO/NurPhoto

Bitfinex is a cryptocurrency exchange owned and operated by iFinex Inc registered in the British Virgin Islands. Their customers' money has been stolen or lost in several incidents.

In August 2016, Bitfinex announced it had suffered a security breach. In that hack, the second-biggest breach of a Bitcoin exchange platform, 119,754 units of Bitcoin, which was about $72 million at the time, were stolen.

Over the last five years, approximately 25,000 of those stolen Bitcoin were transferred out of Lichtenstein's wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan, the Justice Department said.

The remainder of the stolen funds, comprising more than 94,000 Bitcoin, remained in the wallet used to receive and store the illegal proceeds from the hack.

After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein.

Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex.

The recovered bitcoin was valued at over $3.6 billion at the time of seizure.

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.

Cover photo: Collage: IMAGO/YAY Images & ZUMA Wire

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