Bitfinex Hacker Lichtenstein Sentenced to 5 Years in Prison

A U.S. federal judge sentenced crypto hacker Ilya “Dutch” Lichtenstein to five years in prison for his involvement in the $3.6 billion Bitfinex hack and subsequent money laundering.

See Also: OnDemand | NSM-8 Deadline July 2022:Keys for Quantum-Resistant Algorithms Implementation

The 35-year-old and his wife Heather Morgan pleaded guilty last year to one count of conspiracy to commit money laundering over the 2016 theft of nearly 120,000 bitcoin from the virtual currency exchange.

Lichtenstein, a U.S. citizen born in Russia, used “advanced hacking tools and techniques” to break into the company’s network and fraudulently authorized more than 2,000 transactions transferring 119,754 bitcoin from Bitfinex to a cryptocurrency wallet under his control, said the Department of Justice. He covered his tracks by deleting access credentials and other log files that could have revealed his presence, after which he enlisted his wife Morgan’s help to launder the stolen funds. They used “numerous sophisticated techniques,” such as setting up fictitious identities for online accounts, automating transactions, depositing the stolen funds into accounts at dark net markets and cryptocurrency exchanges and mixers before withdrawing them, and even exchanging a portion of the stolen funds into gold coins.

“Neither the hack nor the laundering scheme was an impulsive decision,” prosecutors said, adding that Lichtenstein spent months attempting to gain access to Bitfinex’s infrastructure and get the accesses and permissions he needed to orchestrate the hack.

Lichtenstein is also set to serve three years of supervised release after his imprisonment. He has already served out two years and nine months of the sentence, after the “Crypto Couple” were arrested in New York in February 2022.

The couple laundered about 21% of the stolen funds, worth at least $14 million at 2016 prices and exceeded $1 billion at the time of their 2022 arrest. Law enforcement seized the rest of the funds, currently valued at over $6 billion. “He became one of the greatest money launderers that the government has encountered in the cryptocurrency space,” the prosecutors wrote.

Although Lichtenstein only told his wife about the hack three years later, he solicited her help to launder the funds “without explaining exactly what he was doing,” the prosecutors said. Morgan “was certainly a willing participant and bears full responsibility for her actions, but she was a lower-level participant,” they said.

Morgan, who calls herself a “surrealist artist,” rapper Razzlekhan and the Crocodile of Wall Street, is due to be sentenced on Monday. The government has recommended an 18-month sentence for her.