Bitfinex hacker sentenced in money laundering conspiracy involving billions in stolen cryptocurrency

Date: Nov. 14, 2024

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WASHINGTON - Ilya Lichtenstein of New York City was sentenced today in U.S. District Court in Washington D.C. to 60 months in federal prison for his involvement in a money laundering conspiracy arising from the hack and theft of approximately 120,000 bitcoin from Bitfinex, a global cryptocurrency exchange.

The sentencing was announced by U.S. Attorney Matthew M. Graves for the District of Columbia; Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department's Criminal Division; Chief Guy Ficco of IRS Criminal Investigation (IRS-CI); Assistant Director Bryan Vorndran of the FBI's Cyber Division; FBI Special Agent in Charge Robert W. "Wes" Wheeler, of the Chicago Field Office; and Special Agent in Charge William S. Walker of the Homeland Security Investigations (HSI) New York Field Office.

According to court documents, Lichtenstein hacked into Bitfinex's network in 2016, using advanced hacking tools and techniques. Once inside the network, Lichtenstein fraudulently authorized more than 2,000 transactions transferring 119,754 bitcoin from Bitfinex to a cryptocurrency wallet in Lichtenstein's control. Lichtenstein then took steps to cover his tracks by deleting from Bitfinex's network access credentials and other log files that could have revealed his conduct to law enforcement. Following the hack, Lichtenstein enlisted the help of his wife, Heather Morgan, in laundering the stolen funds.

Lichtenstein, at times with Morgan's assistance, employed numerous sophisticated laundering techniques, including using fictitious identities to set up online accounts; utilizing computer programs to automate transactions; depositing the stolen funds into accounts at a variety of darknet markets and cryptocurrency exchanges and then withdrawing the funds; converting bitcoin to other forms of cryptocurrency in a practice known as "chain hopping;" depositing a portion of the criminal proceeds into cryptocurrency mixing services; using U.S.-based business accounts to legitimize Lichtenstein's and Morgan's banking activity; and exchanging a portion of the stolen funds into gold coins.

On Aug. 3, 2023, Lichtenstein and Morgan both pleaded guilty to one count of conspiracy to commit money laundering. In addition to his term of imprisonment, Lichtenstein was ordered to serve three years of supervised release. Morgan is scheduled to be sentenced on Nov. 18.

The IRS-CI Washington D.C. Cyber Crimes Unit; FBI Chicago Field Office; FBI Virtual Assets Unit; and HSI New York Field Office are investigating the case, with assistance from the Justice Department's Office of International Affairs and the Ansbach Police Department in Germany.

The matter is being prosecuted by Special Assistant U.S. Attorney Christopher B. Brown for the District of Columbia and Trial Attorneys Jessica Peck and C. Alden Pelker of the Criminal Division's Computer Crime and Intellectual Property Section (CCIPS). Assistant U.S. Attorney Jolie Zimmerman, Paralegal Specialists Angela De Falco and Brian Rickers, and Legal Assistant Jessica McCormick, all for the District of Columbia, provided valuable assistance. CCIPS Trial Attorney Christen Gallagher, former Assistant U.S. Attorney Jessica C. Brooks for the District of Columbia, the U.S. Attorneys' Offices for the Eastern District of Pennsylvania and Southern District of New York, and the HSI Philadelphia Field Office also provided significant assistance.

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.