Couple accused of laundering $5 billion in hacked bitcoin, which was only worth $100 million when it was stolen
A couple in New York faces charges of conspiring to launder billions of dollars in cryptocurrency stolen from a 2016 hack of a virtual currency exchange.
Key points:
- The couple are not being charged in the hacking of the bitcoin
- Much of the laundering occurred through accounts on a dark web site since shut down
- The laundered bitcoin was used to purchase gold, NFTS and gift cards
The US Justice Department says the stolen funds it seized in the arrests amount to its largest financial seizure — worth roughly $3.6 billon ($5 billion).
US federal law enforcement officials said they recovered the money in cryptocurrency linked to the hack of Bitfinex, a virtual currency exchange whose systems were breached nearly six years ago.
Ilya “Dutch” Lichtenstein, a citizen of Russia and the United States, and his wife, Heather Morgan, were arrested in Manhattan on Tuesday morning, accused of relying on various sophisticated techniques to launder the stolen money and conceal the transactions.
The pair faces federal charges of conspiracy to commit money laundering and conspiracy to defraud the United States.
The couple was not charged in the hacking of Bitfinex, which resulted in the theft of almost 120,000 bitcoins — at the time valued at around $71 million ($99 million) and is now worth more than five times as much, officials said.
Investigators used what Ms Monaco described as “old-fashioned police work” to trace the stolen funds to more than a dozen accounts that officials say were controlled by Mr Lichtenstein, Ms Morgan and their businesses.
They relied on accounts at a dark web criminal marketplace called AlphaBay, which was dismantled by the US Justice Department in 2017, as a “pass-through” for the stolen bitcoin, according to documents.
The couple relied, investigators say, on classic money laundering techniques to hide their activities and the movement of the money, such as setting up accounts with fictitious identities.
Millions of dollars of the transactions were cashed out through bitcoin ATMs and used to purchase gold and non-fungible tokens (NFTs) as well as more mundane items like Walmart gift cards for personal expenses, prosecutors said.
US Justice Department officials say that though the creation of cryptocurrency and virtual currency exchanges represent innovation, the trend has also been accompanied by money laundering, ransomware and other crimes.
The US last year formed a cryptocurrency enforcement team to tackle the trend.
“Today’s arrests, and the Department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” Ms Monaco said.
“In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter the form it takes.”
AP