Bitfinex Hacker Ilya Lichtenstein Sentenced to Five Years for Money Laundering
Ilya Lichtenstein, a hacker involved in one of the largest crypto heists, was sentenced to five years in prison on November 14 for laundering proceeds from his 2016 attack on Bitfinex, a major crypto exchange.
The operation stole nearly 120,000 Bitcoin, valued at $70 million at the time, now worth approximately $10.5 billion due to significant price increases.
The 2016 Heist: Overview
In August 2016, Lichtenstein exploited vulnerabilities in Bitfinex’s systems, using advanced hacking tools to authorize over 2,000 fraudulent transactions, transferring 119,754 BTC to a wallet he controlled. He subsequently deleted critical credentials and log files to obscure his activities.
Lichtenstein collaborated with his wife, Heather Morgan, to launder the stolen funds. They employed various techniques to hide the bitcoin's origin, including creating fake identities for online accounts, automating transactions with specialized software, moving funds through darknet markets and crypto exchanges, and engaging in “chain hopping” by converting bitcoin into other cryptocurrencies.
The couple also utilized crypto mixing services and deposited some funds into US-based business accounts to legitimize their banking activities. Additionally, part of the stolen bitcoins was converted into gold coins.
Legal Consequences
In February 2022, Lichtenstein and Morgan were arrested in Manhattan on charges of conspiracy to commit money laundering and defraud the United States. On August 3, 2023, both pleaded guilty to a single count of conspiracy to commit money laundering.
Lichtenstein received a five-year prison sentence, followed by three years of supervised release. Morgan is scheduled for sentencing on November 18.
The investigation involved multiple agencies, including the IRS Criminal Investigation Cyber Crimes Unit, FBI’s Chicago Field Office, FBI Virtual Assets Unit, and Homeland Security Investigations New York Field Office, supported by the Justice Department’s Office of International Affairs and Germany’s Ansbach Police Department.
Lichtenstein's sentencing highlights the ongoing efforts against cybercrime and crypto-related offenses, emphasizing the commitment of law enforcement to pursue justice for victims.