Categories: CyberCrimeSecurity

US Programmer Admits To $4.5bn Bitfinex Hack

A New York City programmer has admitted to stealing billions of dollars in Bitcoin from virtual currency Bitfinex in 2016.

Russia-born Ilya Lichtenstein made the admission as part of a plea deal with US federal prosecutors, who arrested Lichtenstein and his wife Heather Morgan last year on charges of laundering the stolen funds.

At the time of their arrest in February 2022 prosecutors did not identify Lichtenstein as the hacker, saying only that the funds had been transferred into a cryptocurrency wallet under his control.

Under the deal Lichtenstein and Morgan pleaded guilty to attempting to launder the cryptocoins, which were worth about $4.5 billion (£3.5bn) at the time of their arrest, making it the largest financial seizure in the history of the US Justice Department.

Image credit: Heather Morgan/Instagram

Funds traced

The 119,000 Bitcoins had been worth about $72m at the time of their theft in 2016.

Morgan, who pleaded guilty to an additional count of conspiracy to defraud the United States, faces a prison sentence of up to 10 years, while Lichtenstein could be imprisoned for a maximum of 20 years.

Bitfinex initially removed 36 percent from the value of all of its customer accounts as a result of the hack, but later reimbursed its customers, meaning the company is in line for a windfall once the coins are returned.

US prosecutors recovered detailed financial records kept by Lichtenstein that allowed them to recover nearly all the stolen funds.

Prosecutors said Lichtenstein and Morgan stored burner phones in hollowed-out books. Image credit: US Department of Justice

‘Crocodile of Wall Street’

“In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions,” said deputy US attorney general Lisa O. Monaco at the time of the arrest. “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 couple had converted some of the funds into physical gold coins, which Morgan buried, prosecutors said.

While the couple were attempting to launder the stolen Bitcoin Morgan portrayed herself as a tech entrepreneur, writing columns for financial publications such as Forbes and filming rap videos under the alias Razzlekhan, the “Crocodile of Wall Street”.

US streaming network Hulu is currently developing a television series about Morgan starring Lily Collins.

Prosecutors traced stolen funds to Lichtenstein and Morgan. Image credit: US Department of Justice
Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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