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Cryptocurrency Hack Results in the Seizure of $3.6 Billion in Bitcoin by the Justice Department

The Justice Department announced on Tuesday that it had seized more than $3.6 billion in Dreamstime.com assets.

According to a press release from the DOJ, the value of bitcoin at the time it was discovered was the greatest crypto seizure ever made by the agency.

Bitcoin

In 2016, a bitcoin exchange was hacked, and this information was stolen.

According to the Justice Department, two suspects were apprehended without incident in Manhattan for allegedly attempting to launder the proceeds.

The value of the Bitcoin stolen in the 2016 hack of Bitfinex, a virtual currency exchange, was estimated to be at $4.5 billion.

Ilya Lichtenstein, 34, and Heather Morgan, 31, both of New York, are due to appear in federal court in Manhattan on Tuesday afternoon, according to the Justice Department.

After a hacker penetrated Bitfinex’s computers and performed more than 2,000 unlawful transactions, the pair reportedly planned to launder 119,754 Bitcoin. According to federal authorities, the transactions were deposited in a digital wallet controlled by Lichtenstein.

Cryptocurrency Hack Results in the Seizure of $3.6 Billion in Bitcoin by the Justice Department

The remaining stolen monies, totaling over 94,000 Bitcoin, were kept in the wallet that was used to receive and hold the hack’s unlawful earnings.

Approximately 25,000 stolen Bitcoins were transferred out of Lichtenstein’s wallet over the last five years via a lengthy and intricate laundering process, with some of the stolen monies put into financial accounts held by Lichtenstein and Morgan.

Digital-asset exchanges and other trading systems are frequently hacked. According to Chainalysis, a total of $14 billion in cryptocurrency was stolen in 2021, mostly via Defi or decentralized-finance trading platforms.

However, big exchanges have been hacked in the past, notably the infamous Mt. Gox in 2014, which lost over 850,000 Bitcoins worth $450 million at the time. Approximately 200,000 Bitcoins were eventually recovered.

Despite this, law enforcement has had some success in locating stolen cryptocurrencies. Last June, the Department of Justice confiscated 63.7 Bitcoins worth $2.3 million in ransom money paid to hackers by the Colonial Pipeline.

According to Stephane Ouellette, CEO of FRNT Financial, a crypto derivatives firm in Toronto, the DOJ’s apparent success in recovering the Bitfinex crypto might represent a vote of confidence in digital assets for institutional investors.

“This will alter many people’s counterparty risk calculations of the ecosystem,” he told Barron’s. “The Bitfinex attack happened at a far earlier stage, and seeing so much of it recovered would come as a shock to many.”

He went on to say that crypto exchanges have grown in size, sophistication, and capitalization in order to withstand hacks. “Even if there is a hack,” he added, “the chance of recovery is extremely real.”

Business News Highlights

In a crypto hack, the Justice Department seizes $3.6 billion in bitcoin.
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