A hacker has been sentenced to five years in prison for stealing and laundering approximately 120,000 bitcoin – worth more than $11 billion at current prices – from the crypto exchange Bitfinex.
Ilya Lichtenstein, 35, hacked into Bitfinex’s network in 2016, before laundering the funds with his wife Heather Morgan.
It was one of the largest-ever thefts from a cryptocurrency exchange, with US District Judge Colleen Kollar-Kotelly describing the theft as “meticulously planned” and not an impulsive act.
“It's important to send a message that you can't commit these crimes with impunity, that there are consequences to them,” she said.
Lichtenstein, who gets credit for the two years and nine months that he has spent in jail since his February 2022 arrest, expressed remorse for “wasting my talents on crime instead of a positive contribution to society.” He said he hopes that he can apply his expertise to fight cybercrime when he gets out of prison.
“I want to take full responsibility for my actions and make amends any way I can,” he said.
The judge is scheduled to sentence Morgan on Monday. Lichtenstein pleaded with the judge to spare his wife from prison, blaming himself for her involvement.
The 119,754 bitcoin stolen from the Hong Kong-based exchange was worth approximately $71 million at the time of the hack.
Several months later, Lichtenstein began moving the stolen bitcoin in a string of complex transactions designed to conceal its path across a series of accounts and platforms. He enlisted his wife’s help in cleaning the stolen funds.
Lichtenstein, an entrepreneur and cryptocurrency investor, is a US citizen who was born in Russia and grew up in a Chicago suburb. Morgan, a business owner and writer, adopted the alter ego ‘Razzlekhan’ for performing rap songs and recording videos for her music.
Lichtenstein and Morgan were living in New York City when they were arrested in February 2022. They had been living in San Francisco around the time of the hack.
An attorney for Bitfinex said the hack “devastated” its finances and its reputation with its customers, with the stolen funds accounting for approximately 36 per cent of the company’s assets at the time of theft.
“Bitfinex had to take unprecedented and immediate action to ensure that any losses from the Hack would ultimately be borne by Bitfinex and its shareholders alone, not its customers,” the lawyer, Barry Berke, wrote in a letter to the judge.
Prosecutors recommended a five-year prison sentence for Lichtenstein, who pleaded guilty in August 2023 to one count of money laundering conspiracy. They recommended an 18-month prison sentence for Morgan, who pleaded guilty to the same charge.
“Neither the hack nor the laundering scheme was an impulsive decision... “Over half a decade, the defendant engaged in what IRS agents described as the most complicated money laundering techniques they had seen to date,” prosecutors wrote.
“The defendant (Lichtenstein) spent months attempting to gain access to Bitfinex’s infrastructure and get the accesses and permissions he needed in order to orchestrate his hack.”
Additional reporting from agencies.
