- The U.S. DoJ has arrested a New York couple for their alleged involvement in siphoning stolen Bitcoins from the Bitfinex exchange.
- The Justice Department also explains how the investigators managed to trace the trail of funds.
On Tuesday, February 8, the U.S. Department of Justice (DoJ) announced its “largest financial seizure ever”! The DoJ has seized a staggering $3.6 billion in Bitcoin linked to the 2016 hack of the Bitfinex crypto exchange.
Furthermore, the Justice Department has also arrested a New York couple on charges of money laundering linked to the hack. On Tuesday morning, the DoJ detailed Ilya Lichtenstein and his wife, Heather Morgan. However, the Manhattan court has granted bail to both of them later in the afternoon. But they shall continue to remain in detention until the finalization of the bond agreement.
The U.S. DoJ has also accused the couple of laundering 119,754 Bitcoins stolen from the Bitfinex hack. Explaining the situation, Deputy Attorney General Lisa O. Monaco said:
Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals. In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.
Bitfinex is the crypto trading platform affiliated with the most widely used stablecoin, Tether (USDT). Back then, the estimated size of the money stolen was around $71 million. These seized Bitcoins are now worth a staggering $3.6 billion. This indirectly makes the U.S. government be holding the most number of Bitcoin than any other country in the world.
How did the DoJ retrieve the stolen Bitcoins?
During their investigation, the authorities identified a wallet containing more than 2000 Bitcoin and further followed the trail leading to accounts at a dark web marketplace dubbed AlphaBay. The Justice Department had dismantled this marketplace back in 2017.
The authorities said that they got access to files with an online account controlled by Lichtenstein. These files contained the private keys to the wallet that used to receive and store Bitcoins stolen during the 2016 Bitfinex hack.
The Department of Justice (DoJ) said that these keys allowed them to lawfully seize and recover more than 94,000 Bitcoins. the authorities further noted that they have tracked the stolen funds to more than a dozen accounts controlled by Morgan, Lichtenstein, and their businesses.
The DoJ has also accused the couple of using sophisticated techniques like “using fictitious identities to set up online accounts; utilizing computer programs to automate transactions, a laundering technique that allows for many transactions to take place in a short period of time; depositing the stolen funds into accounts at a variety of virtual currency exchanges and darknet markets and then withdrawing the funds”.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division said:
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. The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes.
This is one of the biggest victories for lawmakers. The funds will be most likely returned to Bitfinex.