Ilya Lichtenstein, who pleaded guilty to the 2016 hack of cryptocurrency stock alternate Bitfinex, has been sentenced to five years in jail, the U.S. Division of Justice (DoJ) launched Thursday.
Lichtenstein was charged for his involvement in a money laundering scheme that led to the theft of virtually 120,000 bitcoins (valued at over $10.5 billion at current prices) from the crypto alternate. Heather Rhiannon Morgan, his partner, moreover pleaded accountable to the equivalent crimes closing 12 months. They’ve been every arrested in February 2022. Morgan is scheduled to be sentenced on November 18.
“Lichtenstein, 35, hacked into Bitfinex’s group in 2016, using superior hacking devices and methods,” the DoJ said in a press assertion. “As quickly as contained in the neighborhood, Lichtenstein fraudulently authorized better than 2,000 transactions transferring 119,754 bitcoin from Bitfinex to a cryptocurrency pockets in Lichtenstein’s administration.”
Other than taking a string of actions to cowl up the tracks by deleting entry credentials and completely different log recordsdata from Bitfinex’s group, the couple is alleged to have used fictitious identities to rearrange on-line banking accounts to launder the proceeds, depositing them in darknet markets and cryptocurrency exchanges.
The funds have been lastly withdrawn, reworked to completely different cryptocurrencies (a method generally known as chain hopping), depositing a little bit of the ill-gotten property into mixing suppliers like Bitcoin Fog, altering them to fiat international cash and shifting to a U.S. checking account, and exchanging a portion of the crypto for gold money.
The occasion comes days after Roman Sterlingov, the 36-year-old founding father of Bitcoin Fog, was sentenced to 12 years and 6 months in jail for facilitating money laundering actions between 2011 and 2021. Earlier this 12 months, Lichtenstein had testified in courtroom that he had used Bitcoin Fog 10 cases to launder the digital property.
Blockchain analytics company Chainalysis beforehand revealed how the couple’s purchase of Walmart reward enjoying playing cards using the stolen bitcoin at an unnamed digital international cash alternate lastly proved to be their undoing, after it was found that the reward enjoying playing cards have been redeemed using the retail massive’s iPhone app beneath an account in Heather Morgan’s determine.
“That enabled brokers to get a search warrant for Lichtenstein and Morgan’s residence and cloud storage accounts, the place they found recordsdata containing particulars of the cryptocurrency addresses used to maneuver the stolen funds — along with their private keys — along with the false data used to open accounts at cryptocurrency exchanges and plans to amass fake passports,” Chainalysis talked about.
“That discovery enabled investigators to trace the transfer of funds in its entirety.”
Based mostly on the Associated Press, Morgan is a enterprise proprietor and creator. She moreover adopted the alter ego Razzlekhan to hold out rap songs and report motion pictures for her music. The pair had been residing in San Francisco on the time of the hack.
“Lichtenstein masterminded and orchestrated the Bitfinex hack with out telling [Morgan],” prosecutors talked about. “He moreover initially solicited the defendant’s assist with out explaining exactly what he was doing. The defendant was positively a ready participant and bears full accountability for her actions, nevertheless she was a lower-level participant.”
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The sentencing moreover follows a accountable plea from Daren Li, 41, for partaking in a felony scheme to launder $73.6 million stolen by the use of cryptocurrency funding scams using a group of shell corporations and worldwide monetary establishment accounts. Li was arrested once more in April 2024 at Atlanta. He’s anticipated to be sentenced subsequent March.
“Li admitted that he conspired with others to launder funds obtained from victims by the use of cryptocurrency scams and related fraud,” the DoJ said. “In furtherance of the conspiracy, he communicated alongside along with his co-conspirators by the use of encrypted messaging suppliers.”
“With a view to hide or disguise the character, location, provide, possession, and administration of the fraudulently obtained sufferer funds, Li would instruct co-conspirators to open U.S. monetary establishment accounts established on behalf of shell corporations and would monitor the receipt and execution of interstate and worldwide wire transfers of sufferer funds.”
The funds have been subsequently deposited to financial accounts beneath their administration, after which they may be reworked to digital international cash like Tether, and distributed to wallets owned by Li and his co-conspirators. Li faces a most penalty of 20 years in jail.
“Financial criminals and the money launderers who permit them wreak untold damage, ruining lives throughout the course of,” talked about U.S. Authorized skilled Martin Estrada for the Central District of California. “Patrons have to be diligent and on guard in the direction of anyone offering quick riches by means of new, distinctive investments. A healthful dose of skepticism could forestall financial wreck down the road.”
