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Bitfinex Hacker Jailed for Five Years Over Billion Dollar Crypto Heist
The hacker behind one of the largest cryptocurrency heists in history will spend five years in a US prison.
US resident Ilya Lichtenstein, 35, was sentenced on November 14 to five years in jail after he hacked into Bitfinex, one of the largest cryptocurrency exchange platforms, in 2016. Lichtenstein stole 120,000 bitcoins and started laundering the money with his wife, Heather Rhiannon Morgan.
The heist was worth $70m at the time of the hack but had risen to more than $4.5bn by the time they were arrested in February 2022. It would be worth $10.7bn at today’s current rate.
Successful Crypto-Laundering Scheme
Lichtenstein is a Russian-born entrepreneur and cryptocurrency investor who grew up in Chicago.
Morgan is a US businesswoman and artist who performs rap songs under the pseudonym “Razzlekhan.”
Around 2016, the couple were living in San Francisco.
After Lichtenstein hacked Bitfinex, a Hong Kong-based crypto exchange, he solicited Morgan to help in laundering the proceeds “without explaining exactly what he was doing,” according to prosecutors. The couple successfully laundered about 21% of the stolen funds, which amounted to approximately $14m at 2016 rates. He told her about the theft in 2019.
This led prosecutors to claim that Morgan “was certainly a willing participant and bears full responsibility for her actions, but she was a lower-level participant.”
Lichtenstein also received the help of couriers he met during trips to Kazakhstan and Ukraine, to smuggle laundered money back into the US.
“Over half a decade, the defendant engaged in what Internal Revenue Service (IRS) agents described as the most complicated money laundering techniques they had seen to date,” prosecutors wrote.
The couple were arrested in 2022, when they lived in New York. Lichtenstein has been in prison ever since.
96% of Stolen Bitcoins Recovered
After his arrest, Lichtenstein immediately started cooperating with law enforcement, helping them with other cybercrime investigations.
He and Morgan pleaded guilty to one count of money laundering conspiracy in August 2023.
Prosecutors recommended five years in prison for Lichtenstein and 18 months for Morgan.
Lichtenstein also helped recover over 96% of the stolen funds, said defense attorney Samson Enzer. Most of it had never been spent.
During the sentencing hearing, US District Judge Colleen Kollar-Kotelly told Lichtenstein that his theft was “meticulously planned” and that it was “important to send a message that you can’t commit these crimes with impunity, that there are consequences to them.”
Lichtenstein said he takes full responsibility for his acts but asked that his wife not be sentenced to any prison time.
Morgan’s sentencing hearing is scheduled for November 18.
Photo credit: 24K-Production/Shutterstock
