Ilya Lichtenstein, who pleaded accountable to the 2016 hack of cryptocurrency inventory trade Bitfinex, has been sentenced to 5 years in jail, the U.S. Division of Justice (DoJ) introduced Thursday.
Lichtenstein used to be charged for his involvement in a cash laundering scheme that resulted in the robbery of just about 120,000 bitcoins (valued at over $10.5 billion at present costs) from the crypto trade. Heather Rhiannon Morgan, his spouse, additionally pleaded accountable to the similar crimes closing yr. They had been each arrested in February 2022. Morgan is scheduled to be sentenced on November 18.
“Lichtenstein, 35, hacked into Bitfinex’s community in 2016, the usage of complex hacking equipment and methods,” the DoJ mentioned in a press commentary. “As soon as throughout the community, Lichtenstein fraudulently approved greater than 2,000 transactions moving 119,754 bitcoin from Bitfinex to a cryptocurrency pockets in Lichtenstein’s keep an eye on.”
But even so taking a string of movements to hide up the tracks through deleting get admission to credentials and different log information from Bitfinex’s community, the couple is claimed to have used fictitious identities to arrange on-line banking accounts to launder the proceeds, depositing them in darknet markets and cryptocurrency exchanges.
The budget had been in the end withdrawn, transformed to different cryptocurrencies (one way known as chain hopping), depositing a piece of the ill-gotten property into blending products and services like Bitcoin Fog, changing them to fiat foreign money and transferring to a U.S. checking account, and exchanging a portion of the crypto for gold cash.
The advance comes days after Roman Sterlingov, the 36-year-old founding father of Bitcoin Fog, used to be sentenced to twelve years and 6 months in jail for facilitating cash laundering actions between 2011 and 2021. Previous this yr, Lichtenstein had testified in court docket that he had used Bitcoin Fog 10 instances to launder the digital property.
Blockchain analytics company Chainalysis up to now published how the couple’s acquire of Walmart present playing cards the usage of the stolen bitcoin at an unnamed digital foreign money trade in the end proved to be their undoing, after it used to be discovered that the present playing cards had been redeemed the usage of the retail massive’s iPhone app beneath an account in Heather Morgan’s title.
“That enabled brokers to get a seek warrant for Lichtenstein and Morgan’s house and cloud garage accounts, the place they discovered information containing main points of the cryptocurrency addresses used to transport the stolen budget — together with their non-public keys — together with the false data used to open accounts at cryptocurrency exchanges and plans to obtain faux passports,” Chainalysis mentioned.
“That discovery enabled investigators to track the go with the flow of budget in its entirety.”
In keeping with the Related Press, Morgan is a trade proprietor and author. She additionally followed the modify ego Razzlekhan to accomplish rap songs and report movies for her tune. The pair have been dwelling in San Francisco on the time of the hack.
“Lichtenstein masterminded and orchestrated the Bitfinex hack with out telling [Morgan],” prosecutors mentioned. “He additionally first of all solicited the defendant’s help with out explaining precisely what he used to be doing. The defendant used to be definitely a prepared player and bears complete duty for her movements, however she used to be a lower-level player.”
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The sentencing additionally follows a accountable plea from Daren Li, 41, for engaging in a legal scheme to launder $73.6 million stolen via cryptocurrency funding scams the usage of a community of shell firms and global financial institution accounts. Li used to be arrested again in April 2024 at Atlanta. He’s anticipated to be sentenced subsequent March.
“Li admitted that he conspired with others to launder budget got from sufferers via cryptocurrency scams and similar fraud,” the DoJ mentioned. “In furtherance of the conspiracy, he communicated along with his co-conspirators via encrypted messaging products and services.”
“In an effort to hide or cover the character, location, supply, possession, and keep an eye on of the fraudulently got sufferer budget, Li would instruct co-conspirators to open U.S. financial institution accounts established on behalf of shell firms and would observe the receipt and execution of interstate and global twine transfers of sufferer budget.”
The budget had been therefore deposited to monetary accounts beneath their keep an eye on, and then they might be transformed to digital foreign money like Tether, and dispensed to wallets owned through Li and his co-conspirators. Li faces a most penalty of two decades in jail.
“Monetary criminals and the cash launderers who allow them wreak untold hurt, ruining lives within the procedure,” mentioned U.S. Legal professional Martin Estrada for the Central District of California. “Traders must be diligent and on guard in opposition to someone providing fast riches by means of new, unique investments. A hefty dose of skepticism may save you monetary smash down the street.”