Feds Seize Mind-Boggling Sum After Crypto Hack

It's the largest seizure of funds in DOJ history
By Rob Quinn,  Newser Staff
Posted Feb 8, 2022 3:09 PM CST
Feds Seize Mind-Boggling Sum After Crypto Hack
The Bitcoin logo appears on the display screen of a cryptocurrency ATM in Salem, NH.   (AP Photo/Charles Krupa, File)

(Newser) – In 2016 around $71 million in bitcoin was stolen when the Bitfinex cryptocurrency exchange was hacked—and its value today is now around $4.5 billion. Federal investigators say they have now recovered $3.6 billion of that current value, the largest seizure of funds in Justice Department history, and arrested a husband and wife accused of conspiring to launder the cryptocurrency. llya Lichtenstein, 34, and Heather Morgan, 31, allegedly tried to launder the 119,754 bitcoin stolen when a hacker made around 2,000 unauthorized transactions on the exchange, the Washington Post reports. They were arrested Tuesday morning. Federal prosecutors say they moved the funds "through a labyrinth of cryptocurrency transactions."

Prosecutors say the FBI tracked the movement of the cryptocurrency, which went through a darknet exchange linked to major crimes, reports Reuters. "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," Assistant Attorney General Kenneth Polite Jr. said in a statement, per CNBC. More than 94,000 of the nearly 120,000 stolen bitcoin were successfully seized.

The couple are not charged with carrying out the hack, and officials declined to say whether they are suspected of actually stealing the funds, though the Post notes the stolen bitcoin "was sent to a digital wallet controlled by Lichtenstein." According to an affidavit from an IRS agent, they are accused of spending only a small portion of the the funds, buying gold, NFTs, and "mundane things such as purchasing a Walmart gift card for $500." The Daily Beast reports that Lichtenstein is a tech entrepreneur, while Morgan has contributed articles to Forbes and Inc. She also raps under the name Razzlekhan. They face up to 20 years in prison if they are convicted of money laundering. (Read more cryptocurrency stories.)

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