Six years later the law caught up
The U.S. Department of Justice has announced a record haul of more than $3.6 billion worth of bitcoin allegedly taken during the 2016 hack of Bitfinex, an established cryptocurrency exchange. U.S. authorities have arrested a married couple in New York for allegedly trying to launder the money. Notably, court documents do not accuse the couple of the hack itself.
The 2016 heist on Bitfinex netted attackers nearly 120,000 bitcoins worth about $72 million at that time. Due to the rapid appreciation of BTC since then, the value of the heist is now believed to be closer to $5.2 billion.
Because funds were seized by court order, a judge would ultimately decide how the money would be distributed. Still, it is believed the government will seek to return funds to the rightful owners. Bitfinex said in a written statement that the company pledged to “follow appropriate legal processes to establish our rights to a return of the stolen bitcoin.”
Who are they?
According to official statements, 34 year-old tech entrepreneur Ilya Lichtenstein, and his entrepreneur wife, Heather Morgan, were charged with conspiring to launder money.
They are accused of laundering 119,754 bitcoin stolen after a hacker breached Bitfinex and initiated more than 2,000 unauthorized transactions. Prosecutors said the bitcoin was sent to a digital wallet controlled by Ilya Lichtenstein. Federal officials said they seized about 94,000 of the stolen bitcoin, with an estimated value of $3.6 billion.
Follow the money
The case marks the most significant single seizure of funds in the history of the Justice Department and is the most high-profile prosecution to emerge from efforts to investigate crimes involving cryptocurrency. Moreover, it shows that while these particular individuals managed to evade the law for more than five years, eventually, authorities have been able to string together the myriad of blockchain transactions and wallet addresses to pinpoint them and take action.
While following the money trail is an almost guaranteed way to uncover criminal activity, a lack of understanding and complex routing has traditionally made cryptocurrency somewhat of a haven for illegal activity. Bitfinex had offered a reward worth hundreds of millions of dollars for information leading to the return of the stolen funds back in 2016 to no avail. However, U.S. officials would not say if that reward played a role in the case as they appeared to put the puzzle together without assistance.
According to the information provided, much of the stolen bitcoin was placed in accounts on AlphaBay, a platform shut down by authorities in 2017 as an illicit marketplace for drugs, firearms, and fake documents. Authorities could simply backtrack the transactions and activity that led them to the couple. However, an affidavit filed by an IRS agent against the couple alleges that they spent only a tiny fraction of the stolen money, some of it on gold and some on NFTs.
We will keep an eye on the story as it unfolds further. For this writer, there are still questions around why the couple chose to reside in a country with fully operational and proactive law enforcement, knowing that they were risking everything. Additionally, it feels like more people are involved in this incident and that perhaps Ilya Lichtenstein and his wife Heather Morgan are taking the fall for a much bigger operation. Either way, get your popcorn out because this story will drag on for a while.
Newsletter
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds ETH, BTC, AGIX, HEX, LINK, GRT, CRO, OMI, IMMUTABLE X, GALA, AVASTR, GMEE, CUBE, RADAR, FLOW, FTM, BNB, SPS, WRLD, ATOM, and ADA.
