The U.S. Department of Justice (DOJ) has seized more than 94,000 bitcoin ($BTC) worth around $3.6 billion, that was tied to the 2016 hack of the popular cryptocurrency exchange. A New York couple was also arrested for allegedly conspiring to launder the stolen funds.
According to an announcemt from the DOJ Ilya Lichtenstein and his wife, Heather Morgan – who claims to be the “infamous Crocodile of Wall Street” – were detained Tuesday morning and appeared at a federal court in Manhattan by the afternoon. The couple, who had a very active presence on social media, faces 20 years in prison for money laundering charges, plus an additional five years for conspiracy to defraud the U.S.
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In the DOJ’s press release Deputy Attorney General Lisa Monaco was quoted saying:
Today’s arrests, and the Department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals. In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions.
Bitfinex is affiliated with the world’s leading stablecoin issuer Tether. At the time of the hack, the 119,754 BTC that was stolen from the exchange in more than 2,000 unauthorized transactions was estimated to be worth around $71 million. It’s now worth up to $4.5 billion. The unauthorized transactions reportedly sent the funds to Lichtenstein’s wallet.
Bitfinex’s Unus Sed Leo ($LEO) saw its price surge more than 50% after the DOJ’s announcement. The exchange sold its LEO token in 2019 to raise $1 billion, with the token allowing users to get lower trading fees.
In its whitepaper, Bitfinex pledged to use most of any recovered BTC from the hack to purchase LEO on the open market and burn it.
It’s worth noting the defendants were not actually accused of hacking Bitfinex. A 20-page statement of facts, according to Bloomberg, details the complex movement of the stolen BTC after the hack, but does not detail who actually stole the cryptocurrency.
According to the DOJ, the defendants used sophisticated techniques to launder the funder. These included using fictitious identities to set up online accounts, automating transactions, depositing stolen funds into exchanges, and using darknet markets to then withdraw funds from them.
Some of the funds were reportedly cashed out through Bitcoin ATMs. They were then used to buy non-fungible tokens (NFTs) and gold.
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