The US Department of Justice said Tuesday it had uncovered the largest-ever cryptocurrency theft, seizing a record $3.6 billion worth of bitcoin in connection with the 2016 hack of digital currency exchange Bitfinex. A husband-and-wife team suspected of being money launderers. arrested in Manhattan on the morning of Tuesday February 8, 2022, he added. It was the Justice Department's largest ever financial foreclosure, said Deputy Attorney General Lisa Monaco. It added in a statement that it shows crypto money is "not a safe place for criminals."
Ilya Lichtenstein, 34, and his wife Heather Morgan, 31, both New Yorkers, are scheduled to make their first appearance in US District Court for the Southern District of New York. They face charges of conspiring to launder money and defraud the United States. The case was filed in federal court in Washington D.C. It is not clear who will represent the couple in the criminal case. Calls and messages left for Lichtenstein and his wife have not been returned. The pair are accused of conspiring to launder 119,754 bitcoins stolen after a hacker broke into Bitfinex and initiated more than 2,000 unauthorized transactions. Justice Department officials said the transaction at the time was worth $71 million in bitcoin, but with the currency's rise in value, it is now worth more than $4.5 billion. A key clue may come from the 2017 underground digital marketplace that was used to launder some of the funds. US officials said some of the money had been transferred to AlphaBay, any version of eBay hosted on the dark web. When the site was taken down, it allowed authorities to access AlphaBay's internal transaction logs and link them to a cryptocurrency account on Lichtenstein's behalf, according to digital currency tracking firm Elliptic. Bitfinex said in a statement that it was working with the Department of Justice to "establish our right to return stolen bitcoins."
Lichtenstein and his wife also tried to launder money through a network of currency exchanges or claim that the money represented payments to startup Morgan, the Justice Department said. Prosecutors said the illegal proceeds were spent on items ranging from non-exchangeable gold and tokens to "really mundane things like buying a $500 Walmart gift card." The couple have active public profiles, particularly Morgan, as the rapper "Razzlekhan," a pseudonym he says on his website refers to Genghis Khan "but with more pizzazz."
Morgan has also had sidelines in the worlds of painting, fashion design, and writing, where he established himself as a sort of corporate coach. One of his most recent works is titled, in part, “Tips for Protecting Your Business from Cyber Criminals” and features interviews with cryptocurrency exchange owners on how to prevent fraud. The criminal complaint comes more than four months after Monaco announced the department was launching a new National Crypto Money Enforcement Team, made up of a mix of anti-money laundering and cybersecurity experts. Cybercriminals who attack companies, cities, and individuals with ransomware often demand payment in cryptocurrencies. In one high-profile example last year, former partners and associates of the REvil ransomware group caused widespread gas shortages on the US East Coast when it used encryption software called DarkSide to launch a cyberattack on Colonial Pipeline. The Justice Department later recovered about $2.3 million in cryptocurrency ransom that Colonial paid the hackers.
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