The US Department of Justice has arrested two people and confiscated more than $3.6 billion worth of cryptocurrency it says was stolen in the high-profile hack of exchange Bitfinex in 2016, executing the largest seizure financial from the government agency.
New York-based Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, were arrested on Tuesday and charged with conspiracy to launder the proceeds of 119,754 bitcoins valued at $4.5 billion, said prosecutors in a statement. The cryptocurrency was reportedly taken when Hong Kong-based Bitfinex was hacked.
The Justice Department operation came as authorities poured resources into cryptocurrency enforcement after promising to crack down on the criminal use of digital tokens.
“Today’s arrests and the department’s largest ever financial seizure show that cryptocurrency is not a safe haven for criminals,” said Lisa Monaco, assistant attorney general.
US prosecutors have alleged that hacker Bitfinex initiated more than 2,000 unauthorized transactions that sent stolen bitcoins from the exchange to a digital wallet controlled by Lichtenstein. The value of the assets rose from about $71 million at the time of the breach to more than $4.5 billion due to bitcoin’s rise in value, authorities said.
Some of the stolen tokens were transferred to accounts controlled by the couple through a “complicated money laundering process” that included “chain hopping” – jumping between different cryptocurrencies, often in quick succession – and using tokens which have additional anonymity built in. More than 94,000 bitcoins would have remained in the wallet.
Representatives for Lichtenstein and Morgan could not immediately be reached for comment. They were due to appear in Manhattan court for the first time on Tuesday afternoon.
Morgan is also known as Razzlekhan, according to court documents. The site razzlekhan.com describes Razzlekhan as a “rapper [who is] also a software CEO, a writer, an economist and a few other contradictory things”.
Responding to questions about his own digital assets, Morgan told a virtual currency exchange: “My boyfriend (now husband) gave me cryptocurrency for several years (2014, 2015), [sic] who appreciated. I kept them in a cold room,” according to court documents.
Bitfinex said it was “pleased” that the Justice Department had recovered a “significant portion” of the bitcoin stolen in the hack and would continue to cooperate “extensively” with the agency.
Cryptocurrencies have become a payment method of choice for cybercriminals, including thieves as well as ransomware attacks that encrypt victims’ data until a ransom is paid, usually in bitcoins.
However, every transaction is recorded on an immutable blockchain, giving investigators the ability to monitor and track payments, a burgeoning field known as blockchain analytics or forensics.
“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 Kenneth Polite, associate attorney. -general in the criminal division of the DoJ.
Lichtenstein and Morgan were 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. from prison.
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