Cyber Crime
Crypto Hackers Jailed for 5 Years for Stealing Rs 87,000 Crores Worth of Bitcoins from Crypto Exchange
lya Lichtenstein, who admitted guilt in orchestrating the 2016 hack of cryptocurrency exchange Bitfinex, has been sentenced to five years in prison, the U.S. Department of Justice (DoJ) announced o. The breach resulted in the theft of nearly 120,000 bitcoins, now valued at over $10.5 billion.
Lichtenstein’s wife, Heather Rhiannon Morgan, also pleaded guilty to related charges last year. The couple was arrested in February 2022, and Morgan’s sentencing is scheduled for November 18.
According to the DoJ, Lichtenstein, 35, infiltrated Bitfinex’s network in 2016 using sophisticated hacking tools and techniques. Once inside, he authorized over 2,000 unauthorized transactions, transferring approximately 119,754 bitcoins into his personal cryptocurrency wallet.
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To cover his tracks, Lichtenstein deleted access credentials and log files from the exchange’s network.
The stolen funds were laundered using a web of tactics, including the creation of fake identities to open online banking accounts.
The couple transferred funds to darknet markets and cryptocurrency exchanges, engaged in “chain hopping” to convert funds into different cryptocurrencies, and used mixing services such as Bitcoin Fog. Part of the stolen cryptocurrency was converted into fiat currency and deposited into U.S. bank accounts, while another portion was exchanged for gold coins.
Breakthrough in the Case
The couple’s downfall was attributed to blockchain analytics conducted by Chainalysis, which tracked their purchase of Walmart gift cards with the stolen funds. These cards were redeemed through Walmart’s app under an account registered in Morgan’s name.
This evidence led to a search warrant for their residence and cloud storage accounts. Investigators uncovered cryptocurrency wallet details, private keys, fake account information, and plans to acquire false passports, enabling them to trace the stolen funds.
Morgan, who had adopted the persona “Razzlekhan” to perform rap songs, was identified as a business owner and writer. The pair lived in San Francisco at the time of the hack.
Prosecutors stated that while Lichtenstein was the primary architect of the scheme, Morgan, although initially unaware of the full scope of his activities, willingly participated in the laundering operations.
Related Sentencings
The case comes shortly after the sentencing of Roman Sterlingov, the founder of Bitcoin Fog, to 12 years and six months for facilitating money laundering between 2011 and 2021. Earlier this year, Lichtenstein testified to using Bitcoin Fog on ten occasions to launder stolen funds.
Separately, Chinese national Daren Li, 41, pleaded guilty to laundering $73.6 million obtained through cryptocurrency investment scams.
Arrested in April 2024, Li admitted to coordinating with co-conspirators to use shell companies and international bank accounts for moving stolen funds. These were later converted into virtual currencies, such as Tether, and distributed to wallets under their control.
Li faces a maximum sentence of 20 years in prison and is due for sentencing next March.
U.S. Attorney Martin Estrada emphasized the devastating impact of financial crimes, urging investors to remain cautious against schemes promising rapid wealth through unfamiliar or exotic investment opportunities. “A healthy dose of skepticism could save investors from financial ruin,” Estrada remarked.