A pc professional who stole bitcoin price billions of {dollars} at present costs — after which spent years laundering a few of the hacked cryptocurrency with assist from his spouse — was sentenced on Thursday to 5 years in prison.
Ilya Lichtenstein masterminded one of many largest-ever thefts from a virtual currency exchange earlier than he and his spouse, Heather Rhiannon Morgan, carried out an elaborate scheme to liquidate the stolen funds, in accordance to federal prosecutors.
U.S. District Choose Colleen Kollar-Kotelly advised Lichtenstein that his theft was “meticulously deliberate” and never an impulsive act.
“It’s necessary to ship a message that you would be able to’t commit these crimes with impunity, that there are penalties to them,” she stated.
Lichtenstein, who will get credit score for the 2 years and 9 months that he has spent in jail since his February 2022 arrest, expressed regret for “losing my abilities on crime as an alternative of a constructive contribution to society.” He stated he hopes that he can apply his experience to combat cybercrime when he will get out of prison.
“I would like to take full accountability for my actions and make amends any manner I can,” he stated.
The decide is scheduled to sentence Morgan on Monday. Lichtenstein pleaded with the decide to spare his spouse from prison, blaming himself for her involvement.
In August 2016, Lichtenstein hacked right into a digital forex change, Hong Kong-based Bitfinex, and stole roughly 120,000 bitcoin. It was price roughly $71 million on the time of the hack and can be valued at greater than $7.6 billion at present market costs, in accordance to prosecutors.
A number of months later, Lichtenstein started transferring the stolen bitcoin in a string of complicated transactions designed to conceal its path throughout a sequence of accounts and platforms. He enlisted his spouse’s assist in cleansing the stolen funds.
Lichtenstein, an entrepreneur and cryptocurrency investor, is a U.S. citizen who was born in Russia and grew up in a Chicago suburb. Morgan, a enterprise proprietor and author, adopted the alter ego “Razzlekhan” for performing rap songs and recording movies for her music.
Lichtenstein and Morgan had been residing in New York Metropolis once they had been arrested in February 2022. That they had been residing in San Francisco across the time of the hack.
Prosecutors beneficial a five-year prison sentence for Lichtenstein, who pleaded responsible in August 2023 to one depend of cash laundering conspiracy. They beneficial an 18-month prison sentence for Morgan, who pleaded responsible to the identical cost.
“Neither the hack nor the laundering scheme was an impulsive determination. The defendant (Lichtenstein) spent months making an attempt to acquire entry to Bitfinex’s infrastructure and get the accesses and permissions he wanted in order to orchestrate his hack,” prosecutors wrote.
Lichtenstein advised his spouse in regards to the hack over three years later, however he initially solicited her assist in laundering the proceeds “with out explaining precisely what he was doing,” in accordance to prosecutors.
Morgan “was definitely a keen participant and bears full accountability for her actions, however she was a lower-level participant,” (*5*).
Throughout household journeys to Kazakhstan and Ukraine, Lichtenstein met with couriers who delivered him cash that he smuggled again into the U.S.
“Over half a decade, the defendant engaged in what IRS brokers described as probably the most difficult cash laundering methods they’d seen to date,” prosecutors wrote.
Bitcoin is the most important and oldest cryptocurrency, which is digital cash that sometimes isn’t backed by any authorities or banking establishment. Transactions get recorded with know-how referred to as a blockchain.
The couple efficiently laundered about 21 % of the funds stolen from Bitfinex. The laundered cash was price a minimum of $14 million at 2016 costs. Its worth would have exceeded $1 billion on the time of their 2022 arrest.
Authorities seized the remaining funds, collectively valued at over $6 billion at present costs.
“He turned one of many best cash launderers that the federal government has encountered in the cryptocurrency house,” prosecutors wrote.
An legal professional for Bitfinex stated the hack “devastated” its funds and its status with its clients, with the stolen funds accounting for roughly 36% of the corporate’s property on the time of theft.
“Bitfinex had to take unprecedented and rapid motion to make sure that any losses from the Hack would finally be borne by Bitfinex and its shareholders alone, not its clients,” the lawyer, Barry Berke, wrote in a letter to the judge.
A prosecutor stated Lichtenstein instantly started cooperating with federal authorities after his arrest, serving to them with different cybercrime investigations.
Over 96% of the stolen funds have been recovered, with assist from Lichtenstein, in accordance to protection legal professional Samson Enzer. The “huge bulk” of the stolen cash was by no means spent, the lawyer stated.
“This isn’t an evil particular person,” Enzer stated. “This can be a good one that made some very dangerous errors.”
