US federal investigators say they’ve seized $3.6 billion in bitcoin originally stolen in the 2016 hack of Bitfinex, a major cryptocurrency exchange.
On Tuesday, the Justice Department announced it had arrested two New York-based suspects for allegedly trying to launder the stolen funds, which totaled 119,754 bitcoins.
The suspects include 34-year-old Russian-US national Ilya Lichtenstein and his 31-year-old wife Heather Morgan. According to federal agents, the stolen Bitcoin from Bitfinex was moved to several digital wallets under Lichtenstein’s control.
“Over the last five years, approximately 25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan,” the Justice Department said.
The other 94,000 bitcoin remained in a digital wallet until federal agents seized control of it last month. Investigators did so after obtaining a search warrant for one of Lichtenstein's cloud storage accounts, which “contained a list of 2,000 virtual currency addresses, along with corresponding private key.” The data confirmed the stolen bitcoin originated from the 2016 hack of Bitfinex, federal investigators said.
The Justice Department didn’t say if Lichtenstein or Morgan orchestrated the hack of Bitfinex itself. However, evidence shows the two suspects were involved in numerous attempts to launder the stolen funds in small amounts through thousands of digital transactions involving fake accounts and the Dark Web marketplace AlphaBay.
“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 US Assistant Attorney General Kenneth Polite Jr. in the announcement.
At the time of the hack, the stolen cryptocurrency was merely worth around $71 million. But since then, the value of Bitcoin has skyrocketed, putting the stolen bitcoin’s worth at around $4.5 billion, of which $3.6 billion was seized.
The two suspects, Lichtenstein and Morgan, face up to 25 years in prison on charges of conspiracy to commit money laundering and defraud the US. Both are scheduled to make a federal court appearance later today in New York.
According to a court document, the federal government still has possession of the seized Bitcoin. But Bitfinex says it’s working with the Justice Department to return the stolen Bitcoin to the cryptocurrency exchange. “We have been cooperating extensively with the DOJ since its investigation began and will continue to do so,” the company added.