The Justice Department announced Tuesday that it has recovered $3.6 billion in stolen bitcoin — the largest cryptocurrency seizure in U.S. history.
Authorities arrested Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, in New York City on Monday after they allegedly conspired to launder the stolen cryptocurrency they got from a hack of virtual currency exchange Bitfinex.
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“Today, federal law enforcement demonstrates once again that we can follow money through the blockchain and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said Kenneth Polite Jr., an assistant attorney general of the Justice Department’s Criminal Division. “The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes.”
Lichtenstein and Morgan are charged with a conspiracy to commit money laundering and a conspiracy to defraud the United States. If convicted on both charges, they could each face a maximum of 25 years in prison.
Prosecutors allege a 2016 hack of Bitfinex initiated over 2,000 unauthorized transactions that sent stolen bitcoin to a “digital wallet under Lichtenstein’s control.” The hack stole about 119,754 bitcoin, worth an estimated $4.6 billion, according to prosecutors. Prosecutors did not elaborate on who they believed conducted the 2016 Bitfinex hack.
Officials from the FBI, Homeland Security Investigations, and the IRS participated in the investigation. Lichtenstein and Morgan are scheduled to make an appearance later on Tuesday in a federal district court.
Lichtenstein allegedly transferred about 25,000 worth of bitcoin into different accounts he and his wife controlled. The roughly 94,000 remaining bitcoin was seized by special authorities and is worth about $3.6 billion. Authorities recovered the bitcoin after executing a search warrant on online accounts Lichtenstein and Morgan controlled. Those accounts gave law enforcement the keys needed to access his wallet. The remaining 25,000 bitcoin has not been recovered yet.
Lichtenstein’s allegedly stolen bitcoin was worth more than half of the entire GDP of Liechtenstein, a nation that has a similar name. The country has an estimated population of just under 40,000 people.
“In a methodical and calculated scheme, the defendants allegedly laundered and disguised their vast fortune,” said Jim Lee of IRS-Criminal Investigation. “IRS-CI Cyber Crimes Unit special agents have once again unraveled a sophisticated laundering technique, enabling them to trace, access, and seize the stolen funds, which has amounted to the largest cryptocurrency seizure to date, valued at more than $3.6 billion.”
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Last week, blockchain analytics firm Elliptic detected roughly 94,000 in stolen bitcoin from the 2016 Bitfinex hack being moved, Coin Desk reported. It is unclear if that was related to law enforcement activity. Bitcoin was once considered nearly impossible to trace, but law enforcement officers have been proving that wrong. Prosecutors said Tuesday’s arrests show “that cryptocurrency is not a safe haven for criminals.”
