Couple Accused of Money Laundering Pleads Guilty in Bitfinex Hack Case

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Last Updated on August 4, 2023 by Bitfinsider

Ilya Lichtenstein and Heather Morgan, collectively referred to as the “Crocodile of Wall Street,” have admitted guilt to the accusations of money laundering conspiracy brought by the US Department of Justice (DOJ). In a statement made public by the DOJ, it is stated that on August 3 the pair acknowledged to laundering the proceeds of a hack that resulted in the theft of around 120,000 Bitcoin (BTC) from the cryptocurrency exchange Bitfinex.

Ilya Lichtenstein and Heather Morgan were taken into custody on February 2022. When the defendants were arrested, the government found and confiscated more than 95,000 of the stolen Bitcoins (valued roughly $3.6 billion at the time of the arrest). The agency’s largest seizure in history occurred during this incident. The Agency has found and recovered an additional $475 million worth of cryptocurrency stolen in the attack after the arrest.

Lichtenstein, who planned the 2016 breach, reportedly admitted to employing a number of sophisticated hacking tools and methods to get access to Bitfinex’s network. After gaining entry, he falsely approved over 2,000 transactions that resulted in the transfer of 119,754 BTC from Bitfinex to Lichtenstein’s cryptocurrency wallet.

After taking the money, Lichtenstein attempted to hide his tracks by returning to Bitfinex’s system and deleting any digital traces that may have been used to identify him and provide evidence to the police. Lintenstein asked his wife for assistance in repurposing the stolen money following the incident.

When the Bitfinex hack happened, bitcoin was worth less than $1,000, but by the time the pair was apprehended in 2022, it had soared to almost $44,000, bringing the value of the stolen tokens to about $4.5 billion.

To avoid raising any red flags, Lichtenstein and his wife Morgan adopted a variety of money laundering techniques. In order to create online accounts on the dark web and cryptocurrency exchanges, where they deposited the stolen monies, they generated phoney IDs.

After exchanging the bitcoins for other cryptocurrencies and withdrawing the money, they stored it in crypto mixing services. All of this was done to sever the transactional trail and make it more difficult for anyone or the government to identify the source of the payments.

The pair then opened company accounts with US-based banks to give their banking activities some legitimacy. Additionally, Lichtenstein converted some of the stolen money into gold coins, which Morgan assisted in burying.

Though the couple appeared to be out of the public eye, Morgan had a LinkedIn page where she identified herself as a “growth expert & serial entrepreneur.” She offers business advice on her TikTok page as well.

The current maximum sentence for conspiracy to commit money laundering in Liechtenstein is 20 years in prison. While Morgan, who pleaded guilty to one count of conspiracy to launder money and another count of conspiracy to defraud the United States, may be sentenced to five years in prison.

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