Hackers Admit Guilt in Billion-Dollar Cryptocurrency Heist From Bitfinex

Updated: 04 August 2023

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A Bitcoin hacker and his rapper wife plead guilty to executing the 2016 Bitfinex heist that robbed the crypto exchange of $4.5 billion of Bitcoin.

The couple also admitted to money laundering and other crimes solving a long unknown mystery in the crypto industry.

Unraveling the Bitfinex Heist

In a federal court in Washington D.C., Ilya “Dutch” Lichtenstein, 35, finally admitted to orchestrating and executing the hack on August 2 that saw Bitfiniex lose around 120,000 BTC. According to official court documents, Lichtenstein accessed Bitfinex’s network using sophisticated hacking tools and methods.

📣REVEALED: The identity of the 2016 Bitfinex hacker is Ilya Lichtenstein, a NY resident who today pleaded guilty to money laundering conspiracy charges at a court hearing in Washington, D.C.

While pleading guilty to the conspiracy charges, Lichtenstein also admitted to being… pic.twitter.com/FiJ3LWpvhl

— Swan (@Swan) August 3, 2023

He then authorized more than 2,000 transactions fraudulently, in which 119,754 BTC were transferred from the Bitfinex crypto exchange to a wallet in Lichtenstein’s control. He also removed log files and login credentials to hide his traces before asking his wife, Heather Morgan, to assist with the money laundering.

Morgan also admitted to her own set of crimes, including conspiring to launder money and assisting in defrauding the US government. “I did help him launder funds at his direction,” Morgan said.

During the hearing, she revealed that she created fake accounts to store some of the money and concealed gold coins that Lichtenstein had converted from stolen money. She also stated that she kept some of the unlawful gains in her legal accounts.

Together, the duo agreed to have employed techniques such as chain-hopping with anonymity-enhanced crypto (AEC) and obfuscating transaction trails via darknet market deposits and withdrawals to facilitate the laundering.

The couple’s pleas result from an agreement they reached with the authorities after requesting many extensions since their arrest. Both parties agreed to give up roughly $73 million in total as part of the deal.

Lichtenstein has been detained without release since his arrest back in February last year because a judge determined he poses a flight risk. The Russian immigrant has agreed to work with federal authorities and will stay incarcerated until his sentence.

After entering a guilty plea to conspiracy to commit money laundering, Lichtenstein now faces a potential 20-year prison sentence.

On the other hand, Morgan, also known as “Razzlekhan” and “The Crocodile of Wall Street”, is subject to a potential five-year term if convicted for the two counts she admitted to.

Notably, the couple has not been charged for executing the hack.

Unlike Lichtenstein, however, Morgan has been free on a $3 million bond since the arrest. She was present in the courtroom for her husband’s plea hearing.

Bitfinex a Step Closer to Justice

Before the arrest, the Department of Justice (DOJ) reported that of the more than 119,000 BTC that had been stolen, about 95,000 had been seized from Lichtenstein’s crypto wallet. At that time, the seized Bitcoin was worth about $3.6 billion, making it the largest seizure in DOJ history.

In the recent hearing, however, the DOJ updated the figures saying, “Since their arrests, the government has seized another approximately $475 million tied to the hack.”

Bitfinex, which is also the company behind the largest stablecoin USDT, said in a statement that since the hack in 2016, it had been working to aid its customers. “Bitfinex also diligently worked with the U.S. Department of Justice to identify the perpetrators of the hack, recover the stolen bitcoin, and bring the hackers to justice.”

“After seven years, those efforts have come to fruition,” the company said.

Back when the company was hacked, the stolen Bitcoin was only worth $70 million. Years later, its value has increased to a staggering $4.5 billion.

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