"The department once again showed how it can and will follow the money," Deputy Attorney General Lisa Monaco said.
The US Department of Justice announced on Tuesday that it had issued the arrest of Ilya Lichtenstein and his wife Heather Morgan for purportedly plotting to launder cryptocurrency linked to the 2016 Bitfinex attack. The 119,756 Bitcoin (BTC) worth $72 million when hackers attacked the exchange's security in August 2016 is currently worth over $5.1 billion.
People affected by the stolen coins have frequently moved tiny amounts of BTC in multiple transactions ever since the 2016 breach, leaving the majority of the assets unaltered.
According to the Department of Justice, 25,000 BTC of these moved funds were linked to financial accounts managed by Lichtenstein and Morgan. After a search order enabled them to inspect files holding private keys to the wallet, special officers were able to have access to and seize more than 94,000 BTC worth $3.6 billion at the time from Morgan and Lichtenstein.
“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” Deputy Attorney General Lisa 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 what form it takes.”
Kenneth Polite, the DoJ's Assistant Attorney General for the Criminal Division, stated that federal officials may "follow the money through the blockchain." According to the statement, Morgan and Lichtenstein utilized various tactics to launder the stolen cryptocurrency, including chain hopping, depositing and withdrawing coins from exchanges and darknet markets, and automating transactions with software programs.
Moreover, the two allegedly created business accounts in the United States to "legitimize their banking activity."
The FBI and the Internal Revenue Service's criminal investigation agency's Cyber Crimes Unit both stated they were working to track down funds from the 2016 attack. However no agency mentioned how officials were initially directed to Morgan and Lichtenstein, FBI Deputy Director Paul Abbate stated that the agency had "the tools to follow the digital trail."
The DoJ's efforts reflect the largest seizure of cryptocurrency by government officials, with the 2016 Bitfinex attack being one of the largest thefts in crypto history. Lichtenstein and Morgan have been charged with an attempt to launder money and conspiracy to swindle the United States. Each could spend up to 25 years in prison.