Ilya Lichtenstein [1] [2] [3] [4] [5] [6] [8], a New York technology entrepreneur known as “Dutch,” has pleaded guilty to charges related to a $4.5 billion bitcoin-laundering scheme. This scheme involved the hacking of Bitfinex, a cryptocurrency exchange [1] [2] [5] [6] [7] [8], and the fraudulent transfer of stolen bitcoin.
Description
Lichtenstein admitted to being the original hacker behind the 2016 cyberattack on Bitfinex [8]. Using advanced hacking tools [1] [7] [8], he gained unauthorized access to Bitfinex’s network and fraudulently authorized over 2,000 transactions [1] [8], transferring the stolen bitcoin to his control [8]. To help conceal the stolen funds [2], Lichtenstein enlisted the help of his wife [7], Heather Rhiannon Morgan [8], also known as “Razzklekhan.” They used mixing services to cover up the trail and met with “money mules” in Ukraine and Kazakhstan to convert the cryptocurrency into government-issued currency.
Lichtenstein explained his suspicious trips to eastern Europe and central Asia [3], where he converted crypto to cash via proxies and shipped the money to Russia and Ukraine [3]. Morgan became suspicious of her husband’s finances during a trip to Kazakhstan [3], where she witnessed him burning documents [3]. To hide the proceeds [2], they set up online accounts with fake identities and converted some of the stolen funds to gold coins, which were buried in California but later recovered by law enforcement [2].
The couple has now informed law enforcement of the location of the hidden loot [3]. In 2020 and 2021 [1], they converted some of the digital assets to fiat currency and transferred it to a U.S. bank account [1]. They also used the stolen bitcoin to purchase gift cards, which provided crucial clues in the investigation [1]. The probe led to the discovery of files containing details of the cryptocurrency addresses used to move the stolen funds [1], along with fraudulent information and plans to acquire fake passports [1].
Lichtenstein and Morgan have pleaded guilty to money laundering conspiracy and conspiracy to defraud the U.S. [1] [8] They have agreed to forfeit $72 million [2], as the stolen bitcoin had appreciated to over $4.5 billion at the time of their arrest [2] [6]. Sentencing dates have not yet been set. The couple [1] [2] [3] [5] [6] [7] [8], also known as the “Crocodile of Wall Street,” admitted to laundering the proceeds from a hack of approximately 120,000 Bitcoin (BTC) from Bitfinex. The couple’s assets [1] [2] [3] [6] [7] [8], totaling $3.6 billion [6], were seized by prosecutors [6], marking the largest financial seizure in the history of the U.S. [6] Department of Justice [5] [6] [7] [8].
Conclusion
The impact of this bitcoin-laundering scheme is significant, with the stolen funds amounting to billions of dollars. The cooperation of Lichtenstein and Morgan with law enforcement has led to the recovery of some of the stolen assets and the identification of the hackers involved. Bitfinex has taken steps to compensate its customers and has worked with the Department of Justice in these efforts [8]. The forfeiture of the couple’s assets and the ongoing investigation highlight the seriousness of cybercrime and the need for robust security measures in the cryptocurrency industry.
References
[1] https://thehackernews.com/2023/08/nyc-couple-pleads-guilty-to-money.html
[2] https://www.reuters.com/world/us/us-man-pleads-guilty-laundering-crypto-stolen-bitfinex-hack-2023-08-03/
[3] https://nymag.com/intelligencer/2023/08/razzlekhans-husband-ilya-lichtenstein-admits-bitfinex-hack.html
[4] https://news.yahoo.com/crypto-couple-husband-confesses-being-174150960.html
[5] https://coinmarketcap.com/headlines/news/bitfinex-couple-money-laundering/
[6] https://finance.yahoo.com/news/us-man-pleads-guilty-laundering-152333317.html
[7] https://cyberscoop.com/nyc-couple-guilty-bitfinex-hack/
[8] https://www.cnbc.com/2023/08/03/new-york-man-admits-being-original-bitfinex-hacker-during-guilty-plea-in-dc-to-bitcoin-money-laundering.html
