The Justice Department confiscated more than $3.6 billion worth of bitcoin and arrested a married couple believed to be involved in laundering stolen cryptocurrency. Authorities said the bitcoin that was confiscated was a part of haul stolen hackers around six years ago.
The confiscated cryptocurrency, 94,636 bitcoins, was reportedly part of a heist involving 119,754 bitcoins stolen from Hong Kong-based cryptocurrency exchange Bitfinex in 2016. The couple, 34-year-old Ilya Lichtenstein and 31-year-old Heather Morgan, were charged with conspiring to launder the stolen bitcoins.
Officials did not say whether the couple was involved in the hacking in 2016. Based on the current value of bitcoin today, the confiscated bitcoins is the Justice Department's largest financial seizure ever.
The couple was granted bail, which was set at $5 million for Lichtenstein and $3 million for Morgan. Court documents showed that Lichtenstein was a citizen of both the U.S. and Russia. He described himself as a tech entrepreneur. Meanwhile, his wife is a U.S. citizen describing herself as a "serial entrepreneur."
The heist in 2016 was one of the first major hacking incidents involving large cryptocurrency exchanges. While some hackers were caught and stolen funds were recovered, others had made away with large amounts of digital currency. The hacking incidents underscored the vulnerability of some exchanges, leading to dramatic plunges in the value of certain cryptocurrencies. Following the Bitfinex hack, bitcoin's value dropped by more than 20%.
U.S. deputy attorney general Lisa O. Monaco said the arrest should serve as a warning to criminals. She added that criminals should not consider cryptocurrencies a safe haven for their illegal activities.
Monaco claimed that the couple had attempted to remain anonymous by laundering the stolen bitcoin through a labyrinth of transactions. However, they were eventually tracked down.
Authorities said they traced the 119,754 stolen bitcoins to Lichtenstein's digital wallet after it was sent by the hackers who breached Bitfinex's systems. It reportedly passed through 2,000 other wallets before it reached Lichtenstein. He reportedly sent out 25,000 bitcoins to different wallets over the last five years to cash it out, using a complicated series of transactions to hide the fact that the bitcoins were stolen.
Investigators at the Justice Department were able to trace the movements of the bitcoin on the blockchain, which is effectively a permanent electronic ledger that records each transaction. Investigators found that Lichtenstein had converted the bitcoins to fiat currencies, which were then deposited to bank accounts under his control. He then used the money to buy high-value items such as gold and non-fungible tokens.
