Has someone just earned a bounty of $264 Million?
2 August 2016: In the early hours, a dramatic virtual heist took place. The systems of Bitfinex were compromised in a hack, resulting in 119,756 BTC being lost with a value at the time in the region of $72 Million. The shocking news caused the price of Bitcoin to plummet 20% as the shockwaves spread across the globe. The search for the criminals involved was slow and painstaking, and in August 2020 Bitfinex made an ambitious plea. The exchange offered a bounty of $400 Million for the successful return of the missing Bitcoin, with the offer being open to the hackers themselves in a much-delayed White-Hat agreement. The offer was for 25% of all recovered funds (at current market value) to be paid to the hackers, with an additional 5% payable to the person(s) responsible for leading them to their return.
Fast forward to 1 February 2022 and the stolen Bitfinex Bitcoin was moved from its wallet in tranches of 10,000 BTC at a time.Intrigue was building, and there were murmurs of the funds being moved by law enforcement rather than an attempt to cash out by the hackers; no attempt to hide the movements was made and no mixer was involved.
All became clear in a release by The United States Department of Justice just one week later 8 February 2022. A married couple from Manhattan have been arrested for alleged conspiracy to launder cryptocurrency valued at $4.5 Billion. Ilya Lichtenstein, 34, and Heather Morgan, 31 are both named as the accused in a complex and intriguing case spanning several years and involving many complex laundering techniques.
In the time since the initial hack, the wallets containing the illicit funds have been meticulously monitored and it has been recorded that to date, around 25,000 Bitcoin have made their way from the initial wallet controlled by Lichtenstein into financial accounts controlled by the couple. The Department of Justice have seized around 94,000 remaining Bitcoin, valued at an incredible $3.6 Billion – The single highest seizure in history by the authority.
U.S. Attorney for the District of Columbia, Matthew M. Graves commented:
"Cryptocurrency and the virtual currency exchanges trading in it comprise an expanding part of the U.S. financial system, but digital currency heists executed through complex money laundering schemes could undermine confidence in cryptocurrency. The Department of Justice and our office stand ready to confront these threats by using 21st century investigative techniques to recover the stolen funds and to hold the perpetrators accountable”
From the outside Ilya Lichtenstein was a successful co-founder of an online marketing firm, a self professed ‘Angel Investor’ going by the nickname ‘Dutch’. Heather R Morgan, the wife of Ilya, is a rapper using the pseudonym Razzlekhan and a former Forbes contributor. An intriguing couple who have caught the imagination of the global press as an unlikely duo to allegedly commit such crimes whilst living in the limelight rather than skulking in the shadows. They face a maximum sentence of 20 years each for the charge of conspiracy to commit money laundering, with an additional 5 years for the charge of conspiracy to defraud the United States if prosecuted and found guilty.
The news of the arrests has brought cryptocurrency, exchanges, and their security to the front pages of mainstream media once again. One thing is certain, there will be much more press coverage as events unfold and more details emerge of the huge heist, eventual recovery, and the journey of the remaining illicit bitcoin through the blockchain over the last 5 years.
It is currently unclear whether the arrests have been made due to a tip-off under the offer announced by Bitfinex, and whether any individual will have right to claim the 5% bounty offered in 2020.
