Tech entrepreneur Ilya Lichtensteind, a dual Russian-American citizen, has confessed to perpetrating the original 2016 Bitfinex hack, according to CNBC.
Along with his wife, Heather Morgan, the couple admitted to attempting to launder a staggering $4.5 billion worth of Bitcoin stolen from Bitfinex.
Until Thursday’s admission, the identity of the hacker responsible for the 2016 cryptocurrency heist had remained undisclosed.
Interestingly, while the couple confessed to attempting to launder the stolen funds, they were not charged with the actual hacking incident itself.
Heather Morgan, also known by the alias “Razzlekhan,” added an unusual twist to their criminal escapade by venturing into the realms of rap music and tech entrepreneurship while evading law enforcement.
Her music videos and rap lyrics depicted her as a “bad-ass money maker” and a “crocodile of Wall Street,” while Forbes articles portrayed her as a successful tech magnate, economist, serial entrepreneur, software investor, and rapper.
The duo’s sophisticated money laundering operation involved meticulously dividing the stolen Bitcoins into smaller amounts and routing them through thousands of different crypto wallets using false identities.
They further intertwined these funds with other criminal cryptocurrency proceeds on the darknet marketplace Alphabay, purchased gold coins, and channeled them through shell companies to legitimize their ill-gotten gains.
However, investigators managed to trace the couple’s criminal proceeds back to the Bitfinex hack when they discovered a trail leading to Walmart gift cards purchased with stolen funds. The veil of anonymity the couple hoped for through complex transactions between various exchanges and cryptocurrencies began to unravel.
A breakthrough came when law enforcement raided the couple’s Manhattan residence, uncovering a wealth of incriminating evidence, including mobile phones hidden in hollowed-out books, disposable handsets, USB drives, and $40,000 in cash.
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Decrypting a meticulously crafted spreadsheet revealed their intricate web of money laundering strategies, leading to the recovery of almost the entire stolen amount.
Communication records exposed the couple’s plans to flee to Russia, Ilya Lichtenstein’s country of birth, to avoid arrest.
Thankfully, law enforcement thwarted their escape, potentially preventing them from evading justice.
The 2016 hack had severely impacted Bitfinex customers, resulting in a collective loss of 36% of their holdings on the crypto exchange.
By 2019, the exchange managed to reimburse the affected customers, offering hope for a financial recovery once the recovered Bitcoins were returned to the rightful owners.
As legal proceedings unfold, Ilya Lichtenstein faces a maximum 20-year prison sentence, while Heather Morgan could be sentenced to up to 10 years behind bars.
The U.S. Department of Justice reported seizing an additional approximately $475 million tied to the hack since the couple’s arrest in February 2022, indicating the ongoing efforts to recover the stolen funds.
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