DOJ Seizes $3.6B in Bitcoins after Busting Entrepreneur Couple in Bitfinex Laundering Scheme

DOJ Seizes $3.6B in Bitcoins after Busting Entrepreneur Couple in Bitfinex Laundering Scheme

The US Justice Department (DOJ) revealed today that it has seized over 94,000 bitcoins allegedly stolen in the 2016 breach of crypto exchange Bitfinex and arrested a married couple suspected of laundering the funds. Ilya Lichtenstein, 34, and Heather Morgan, 31, are accused with conspiring to launder money and defraud the government of the United States. They are scheduled to appear in federal court in Manhattan later today, where they could face up to 25 years in jail if convicted. Officials claimed the asset seizure, which is worth $3.6 billion at today’s bitcoin rates, is the greatest in Justice Department history.

They did not, however, retrieve the entire amount of money lost in the 2016 breach; the 119,754 bitcoins that were reportedly stolen totaled $4.5 billion. Despite the fact that Morgan and Lichtenstein were not officially charged with the breach, authorities claimed they located the suspects because the bitcoins were sent to a digital wallet managed by Lichtenstein. The currencies were obtained after a hacker gained access to Bitfinex’s computers and initiated more than 2,000 illicit transactions, according to the DOJ.

According to their LinkedIn profiles, Lichtenstein and Morgan are both heavily immersed in the IT startup environment. Y Combinator-backed sales software business MixRank was started by Lichtenstein, a dual citizen of the United States and Russia who goes by the nickname “Dutch.” According to Crunchbase and LinkedIn data, Morgan is the founder and CEO of B2B sales firm SalesFolk, where Lichtenstein has served as an advisor since 2014. According to his LinkedIn page, Lichtenstein is a mentor at startup capital firm 500 Startups and an advisor to Ethereum wallet provider Endpass, while Morgan has written pieces for Forbes and Inc.

Over a third of the stolen bitcoins were transferred out of Lichtenstein’s wallet “through a sophisticated money laundering method” that involved creating bogus accounts and converting bitcoins to other, more secretive digital currencies like Monero, a technique known as “chain-hopping.” The 94,000 bitcoins that weren’t laundered remained in the wallet used to keep the hack’s gains, which is how agents claim they were able to collect them following a thorough online search using court-authorized warrants.

Bitfinex stated today in a statement that it would collaborate with US authorities to try to return the stolen cash to their rightful owners. “Today, federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said the DOJ’s criminal division’s assistant attorney general Kenneth A. Polite Jr. in a statement.