Two People Have Been Arrested in Connection With an Alleged Conspiracy to Launder $4.5 Billion in Stolen Cryptocurrency
Two persons were arrested this morning in Manhattan on suspicion of conspiring to launder cryptocurrency that was taken during the 2016 hack of Bitfinex, virtual currency exchange with a market capitalization of around $4.5 billion, according to authorities. So far, law enforcement has confiscated more than $3.6 billion in bitcoin that has been tied to the hacking.
According to Deputy Attorney General Lisa O. Monaco, “today’s arrests, as well as the department’s largest financial seizure in history, demonstrate that cryptocurrency is not a haven for criminals.”
“In a fruitless attempt to maintain their digital anonymity, the defendants laundered stolen monies through a maze of cryptocurrency transactions,” the court read. “Thanks to the painstaking work of law enforcement, the department has once again demonstrated that it is capable of and will track the money, regardless of its source or disguise.”
According to Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division, “Today, federal law enforcement demonstrated once again that we can track money through the blockchain and that we will not allow cryptocurrency to serve as a haven for money laundering or a haven for lawlessness within our financial system.”
“Today’s arrests demonstrate that we are prepared to take a hard stance against individuals who are suspected to be attempting to utilize virtual currencies for illegal purposes.”
Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, both of New York, New York, are due to appear in federal court in Manhattan today at 3:00 p.m. Ilya Lichtenstein and Heather Morgan are expected to appear in federal court today at 3:00 p.m. in Manhattan.
Following a hacker’s penetration of Bitfinex’s systems, which resulted in the execution of more than 2,000 unlawful transactions, Lichtenstein and Morgan are accused of conspiring to launder 119,754 bitcoin stolen from the exchange’s platform.
Those unlawful transactions transferred the stolen bitcoin to a digital wallet under the jurisdiction of the sovereign state of Lichtenstein. A convoluted money laundering process that resulted in some of the stolen funds being put into financial accounts held by Lichtenstein and Morgan occurred during the last five years, transferring around 25,000 bitcoin out of Lichtenstein’s wallet.
The remaining stolen funds, totaling more than 94,000 bitcoin, remained in the wallet that had been used to receive and hold the illegal proceeds of the breach. Special agents gained access to files within an online account maintained by Lichtenstein after executing court-authorized search warrants on accounts controlled by Lichtenstein and Morgan.
They held the private keys required to access the digital wallet that had directly received the monies taken from Bitfinex, and they enabled special agents to legitimately seize and reclaim more than 94,000 bitcoin that had been stolen from Bitfinex in the course of their investigation. At the time of seizure, the bitcoins recovered were worth more than $3.6 billion in total.
Deputy United States Attorney Matthew M. Graves for the District of Columbia said, “Cryptocurrency and the virtual currency exchanges trading in it are becoming an increasingly important part of the United States financial system, but digital currency heists carried out through complex money laundering schemes could undermine public confidence in cryptocurrency.”
Our office, along with the Department of Justice, is prepared to face these dangers by employing 21st-century investigative tactics to recover the stolen funds and bring the culprits to justice.
Lichtenstein and Morgan are accused of employing a variety of sophisticated money-laundering techniques, including creating fictitious identities to open online accounts; using computer programs to automate transactions, a technique that allows for a large number of transactions to be completed in a short period; depositing stolen funds into accounts at a variety of virtual currency exchanges and darknet markets and then withdrawing the funds, which the criminal complaint alleges was done through the use of fictitious identities; and depositing the stolen
Deputy Chief Jim Lee of the Internal Revenue Service’s Criminal Investigation Division said, “The defendants allegedly used a deliberate and calculated operation to launder and disguise their considerable riches” (IRS-CI).
“Special agents from the IRS-CI Cyber Crimes Unit have once again deciphered a sophisticated laundering strategy, allowing them to trace, access, and collect the stolen cash, which has resulted in the greatest cryptocurrency seizure to date, valued at more than $3.6 billion.”
Crime leaves tracks, and today’s case serves as a timely reminder that the FBI has the resources and capabilities to track down and apprehend those tracks, no matter where they may go,” said FBI Deputy Director Paul M. Abbate.
Our FBI Investigative teams and law enforcement partners can find the source of even the most sophisticated schemes and bring those who attempt to exploit the security of our financial infrastructure to justice as a result of their persistent and devoted effort.
“Financial crime strikes to the heart of our nation’s and economy’s economic and national security. The collaboration of the public and private sectors is critical in the aftermath of a hack of this size to maintain consumer confidence in our financial system,” said Acting Executive Associate Director Steve Francis of Homeland Security Investigations (HSI).
To maintain their perceived obscurity, Ilya Lichtenstein and his wife Heather Morgan attempted to disrupt legal business to further their criminal ends, and they were successful. In today’s operation, Homeland Security demonstrated its commitment and capacity to collaborate with a group of people who are willing to help unravel technical fraud schemes and identify the criminals, regardless of where they operate.”
In addition to conspiracy to commit money laundering, for which a maximum term of 20 years in prison is possible, Lichtenstein and Morgan are charged with conspiracy to defraud the United States, which is punishable by a maximum sentence of five years in prison if convicted.
Following consideration of the United States Sentencing Guidelines as well as other statutory circumstances, a federal district court judge will determine the appropriate punishment.
The IRS-CI Washington, D.C. Field Office’s Cyber Crimes Unit, the FBI’s Chicago Field Office, and the Homeland Security Investigations-New York were in charge of the investigation. During this inquiry, the Ansbach Police Department in Germany assisted.
In this case, Trial Attorneys Jessica Peck and C. Alden Parker of the Justice Department’s Computer Crime and Intellectual Property Section, as well as Assistant United States Attorney Christopher B. Brown of the U.S. Attorney’s Office for the District of Columbia, are representing the United States against the defendants.
Paralegal Specialists Angela De Falco and Brian Rickers, as well as Legal Assistant Jessica McCormick, were of great service in this matter. An important contribution was also made by Trial Attorney Christen Gallagher of the Office of International Affairs, as well as representatives from the United States Attorneys’ Offices for the Eastern District of Pennsylvania and the Southern District of New York, HSI-Philadelphia, and former Assistant United States Attorney Jessica C. Brooks.
It is important to remember that a complaint is only an allegation and that all defendants are deemed innocent until proven guilty beyond a reasonable doubt in court.
- A Popular Youtuber Orchestrates a Crypto-currency Fraud in Order to Steal Us$500,000 From Viewers and Use the Money to Shamelessly Purchase a New Tesla.
- The ‘bitcoin Family’ Relocates to Portugal in Order to Take Advantage of the Country’s Zero Percent Tax on Cryptocurrency.
- How to Build Your Stax Strategy?