Cryptocurrencies

Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen Cryptocurrency | Takeover bid

John Barksdale Charged with Cryptocurrency Securities Fraud in Ormeus Coin Sale |  USAO-SDNY

Read the words of the Deputy Attorney General of Monaco here.

Two individuals were arrested this morning in Manhattan for an alleged conspiracy to launder cryptocurrency stolen in the 2016 hack of Bitfinex, a virtual currency exchange currently valued at approximately $4.5 billion. So far, law enforcement has seized over $3.6 billion in cryptocurrency linked to this hack.

“Today’s arrests and the department’s largest ever financial seizure show that cryptocurrency is not a safe haven for criminals,” Deputy Attorney General Lisa O. Monaco said. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a maze of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department has once again shown how it can and will track money, whatever form it takes.

“Today federal law enforcement is once again demonstrating that we can track money through the blockchain and that we will not allow cryptocurrency to be a safe haven for money laundering. money or an area of ​​anarchy within our financial system,” said Assistant Attorney General Kenneth A. Poli Jr. of the Justice Department’s Criminal Division. “Today’s arrests show that we will take a strong stand against those who claim to be trying to use virtual currencies for criminal purposes.”

Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, both of New York, New York, are due to make their first appearances in federal court today at 3:00 p.m. in Manhattan.

According to court documents, Lichtenstein and Morgan conspired to launder the proceeds of 119,754 bitcoins that were stolen from Bitfinex’s platform after a hacker breached Bitfinex’s systems and initiated over 2,000 unauthorized transactions . These unauthorized transactions sent the stolen bitcoin to a digital wallet under Lichtenstein’s control. Over the past five years, approximately 25,000 of these stolen bitcoins were transferred from Lichtenstein’s wallet through a complicated money laundering process that ended with some of the stolen funds being deposited in controlled financial accounts. by Lichtenstein and Morgan. The rest of the stolen funds, including over 94,000 bitcoins, remained in the wallet used to receive and store the illegal proceeds of the hack. After executing court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents were granted access to files in an online account controlled by Lichtenstein. These files contained the private keys needed to access the digital wallet that directly received the funds stolen from Bitfinex and allowed special agents to seize and legally recover more than 94,000 bitcoins stolen from Bitfinex. The recovered bitcoin was valued at over $3.6 billion at the time of the seizure.

“Cryptocurrency and the virtual currency exchanges traded therein are a growing part of the U.S. financial system, but digital currency heists executed through complex money laundering schemes could undermine trust in cryptocurrency. currency,” said U.S. Attorney Matthew M. Graves of the District of Columbia. “The Department of Justice and our office are prepared to address these threats using 21st century investigative techniques to recover stolen funds and hold perpetrators accountable.”

The criminal complaint alleges that Lichtenstein and Morgan used numerous sophisticated laundering techniques, including using fictitious identities to create online accounts; using computer programs to automate transactions, a laundering technique that allows many transactions to take place in a short period of time; deposit the stolen funds into accounts at various virtual currency exchanges and darknet markets and then withdraw the funds, which obscures the trace of transaction history by interrupting the flow of funds; convert bitcoin into other forms of virtual currency, including anonymity-enhanced virtual currency (AEC), in a practice known as “chain hopping”; and the use of US-based business accounts to legitimize their banking activity.

“In a methodical and calculated scheme, the defendants allegedly laundered and disguised their immense fortunes,” said IRS-Criminal Investigation (IRS-CI) Chief Jim Lee. “The IRS-CI Cyber ​​Crimes Unit Special Agents have once again developed a sophisticated laundering technique, allowing them to trace, access and seize stolen funds, representing the largest cryptocurrency seizure to date, valued at over $3.6 billion.”

“Criminals always leave trails, and today’s case reminds us that the FBI has the tools to follow the digital trail, wherever it may lead,” said FBI Deputy Director Paul M. Abbate. “Thanks to the persistent and dedicated work of our FBI investigative teams and law enforcement partners, we are able to uncover the source of the most sophisticated schemes and bring justice to those who attempt to ‘exploit the security of our financial infrastructure.’

“Financial crime strikes at the heart of our national and economic security. With a hack of this magnitude, public and private sector collaboration is critical to ensuring continued consumer confidence in our financial system,” said Steve Francis, Acting Associate Executive Director of Homeland Security Investigations (HSI). “Ilya Lichtenstein and his wife Heather Morgan attempted to subvert legitimate commerce for their own nefarious purposes, operating with perceived anonymity. Today’s action demonstrates HSI’s commitment and ability to work with an array of volunteers to unravel these technical fraud schemes and identify the perpetrators, regardless of where they operate.

Lichtenstein and Morgan are charged with conspiracy to launder money, 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. jail. A federal district court judge will determine any sentence after considering US sentencing guidelines and other statutory factors.

The investigation was conducted by the Cybercrime Unit of the IRS-CI Field Office in Washington, DC, the FBI Field Office in Chicago, and HSI-New York. The Ansbach Police Department in Germany assisted in this investigation.

The case is being prosecuted by prosecutors Jessica Peck and C. Alden Pelker of the Department of Justice’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Christopher B. Brown of the U.S. Attorney’s Office for the District of Columbia. . Paralegal specialists Angela De Falco and Brian Rickers and legal assistant Jessica McCormick provided invaluable assistance. Significant assistance was also provided by Trial Attorney Christen Gallagher of the Office of International Affairs, the U.S. Attorney’s Offices for the Eastern District of Pennsylvania and the Southern District of New York, HSI-Philadelphia, and the former U.S. Attorney assistant Jessica C. Brooks.

A complaint is only an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in court.