Hacker behind billion-dollar Bitcoin heist gets 5-year sentence
Ilya "Dutch" Lichtenstein, the mastermind behind a major Bitcoin heist, has been sentenced to five years in prison by a Washington federal court after being pleaded guilty last year. The sentence was issued on Thursday after Lichtenstein and his wife, Heather Morgan, pleaded guilty to a scheme to hide the proceeds from the 2016 Bitfinex exchange hack. The stolen cryptocurrency is now worth billions of dollars due to Bitcoin's value surge.
Lichtenstein's wife awaits sentencing
Morgan, aka "Razzlekhan," a social-media rapper, will be sentenced on November 18. The US government has recommended an 18-month sentence for her involvement in the money laundering scheme. Lichtenstein (37), faced up to 20 years in prison, but his term was shortened as the government acknowledged his significant assistance, which "has benefited numerous investigations."
Bitfinex hack: A landmark in crypto crimes
The Bitfinex hack saw the theft of 119,754 Bitcoin, worth approximately $71 million at the time. With Bitcoin's value now surpassing $90,000, the stolen assets are worth billions. US District Judge Colleen Kollar-Kotelly called this crime "so massive, it is not comparable to other crypto crimes" owing to its scale and complexity.
Lichtenstein's sophisticated money laundering techniques
A highly-skilled computer expert, Lichtenstein used a number of hacking techniques to breach the Bitfinex network. He fraudulently authorized more than 2,000 transactions in August 2016 to move Bitcoin into a cryptocurrency wallet he controlled. The couple then "employed numerous sophisticated laundering techniques," according to the Department of Justice (DOJ). They created accounts under fake names and made several small transactions to hide their trail.
Couple's extensive money laundering activities
The couple spent their ill-gotten money on non-fungible tokens (NFTs), gold, and Walmart gift cards. Prosecutor Jessica Peck said "they were meticulous and devoted to laundering the funds." She added the couple had laundered 21% of what was stolen in the Bitfinex hack. Prosecutors called Lichtenstein "one of the greatest money launderers that the government has encountered in the cryptocurrency space."
Lichtenstein's history of hacking and financial fraud
Despite having no official criminal record prior to his 2022 arrest, Lichtenstein had a history of hacking and financial fraud. As a teenager, he dabbled in these activities. Around 2015, he illegally transferred a small amount of PayCoin, an alternate form of virtual currency. The following year, he stole approximately $200,000 from a virtual currency exchange, according the the government.
Lichtenstein's remorse and pledge for future
At his sentencing, Lichtenstein, who has been in prison since his arrest in February 2022, expressed remorse for his actions and vowed to use his skills for cybersecurity in the future. He said, "I can make a real difference in the fight against cybercrime." He also pleaded for leniency for his wife, saying that "Heather is only involved in this case because of me."
