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Authorities have arrested a Manhattan couple accused of stealing $4.5 billion in bitcoin by hacking a virtual currency exchange, the Justice Department announced Tuesday.
In conjunction with the arrests, officials said that law enforcement seized bitcoin currently valued at more than $3.6 billion.
The married couple — Ilya Lichtenstein, 34, and Heather Morgan, 31 — face charges of conspiracy to commit money laundering and conspiracy to defraud the United States.
The money laundering charge carries a maximum sentence of 20 years, while the lesser charge carries a maximum of five years.
“Cryptocurrency and the virtual currency exchanges trading in it comprise an expanding part of the U.S. financial system, but digital currency heists executed through complex money laundering schemes could undermine confidence in cryptocurrency,” U.S. Attorney for the District of Columbia Matthew Graves said in a statement.
Prosecutors said Lichtenstein and Morgan planned to launder some 119,754 bitcoin that were stolen after a hacker breached virtual currency exchange Bitfinex in 2016, causing more than 2,000 unauthorized transactions. Those transactions allegedly sent the stolen bitcoin to a digital wallet belonging to Lichtenstein, which were then transferred via a money laundering process to financial accounts controlled by the couple.
“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa Monaco. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”
The criminal complaint alleges that Lichtenstein and Morgan employed numerous sophisticated laundering techniques, including using fictitious identities to set up online accounts; utilizing computer programs to automate transactions, a laundering technique that allows for many transactions to take place in a short period of time; depositing the stolen funds into accounts at a variety of virtual currency exchanges and darknet markets and then withdrawing the funds, which obfuscates the trail of the transaction history by breaking up the fund flow; converting bitcoin to other forms of virtual currency, including anonymity-enhanced virtual currency (AEC), in a practice known as “chain hopping”; and using U.S.-based business accounts to legitimize their banking activity.
“Today, federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division.
“The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes.”
The couple had a federal court hearing on Tuesday afternoon and were released on bonds of $5 million for Lichtenstein and $3 million for Morgan. Both were also ordered to remain at their home in New York with ankle bracelet monitors.
