December 6, 2022

U.S Justice Department Arrests Married Couple And Seizes 3.6 Billion In Bitcoin.

The justice department of Washington, in the late hours of Wednesday, 9th February 2022, made a statement declaring that it had seized over $3.6 billion worth of stolen bitcoin and arrested the perpetrators who turned out to be a married couple.

The couple, Ilya Lichtenstein and Heather Morgan, aged 34 and 31 respectively,  were accused of laundering Bitcoin that hackers had stolen 7 years ago. They were accused in a criminal complaint to have laundered 119,794 Bitcoin that had been stolen in 2015. The laundered Bitcoin is suspected to have been stolen from Hong Kong-based Bitfinex, one of the biggest crypto exchange platforms in the world.

When asked, the justice department official refused to respond on whether Mr. Lichtenstein or Ms. Morgan had been directly involved in the hacking process of the fraudulent activities. Furthermore, records show that the value of the seizures – at the time it was made – turns out to be the department’s largest financial seizure of all time.

The Breach in 2015

This breach that occurred in 2015 was one of several breaches in the cybersecurity of crypto exchanges that accounted for huge theft amounts in digital currencies. 

Even after the recovery of funds stolen, the thefts accentuated the security vulnerabilities in the relatively new world of cryptocurrency. There were cases of thefts that occurred in this year (2015) that drastically affected the general market price of cryptocurrency.

After Bitfinex was hacked, the value of Bitcoin took a heavy slump. The largest cryptocurrency in the world was now down by 20 percent. 

Lisa O. Monaco, the deputy attorney-general said in a statement that the arrest made on Wednesday shows that cryptocurrency is not a safe haven for criminals. She went further to say that the defendants tried to maintain digital anonymity in laundering stolen funds through a labyrinth of cryptocurrency transactions.

The Defendants And Court Proceedings

One of the defendants who go by the name: Mr. Lichtenstein or Dutch, has both American and Russian citizenship and has – on many occasions – described himself as a tech entrepreneur according to the complaint. 

The other defendant, who goes by the name Ms. Morgan, describes herself on her LinkedIn page as a “serial entrepreneur” and a “comedic rapper.” Ms. Morgan also goes by the alias, Razzlekhan.

According to the evidence provided in the court during its proceedings, the hacker who breached Bitfinex’s system carried out about 2000 transactions to send a total of about 119,754 stolen bitcoin to a cryptocurrency wallet that was controlled and accessible to Mr.Lichtenstein.

In the span of five years, 25,000 of the Bitcoin laundered was transferred out of Mr. Lichtenstein’s digital wallet, using a complex series of transactions meant to hide that the cryptocurrencies had been stolen from Bitfinex.

How The Defendants Were Caught

Obviously, the effort to obscure was futile. The investigators traced the movement of the Bitcoin on the blockchain, the permanent fixed electronic ledger that records each time a Bitcoin moves to a new digital account. 

Eventually, some of these funds were deposited into financial accounts controlled by Mr. Lichtenstein and Ms. Morgan, who used the money deposited to purchase items such as gold, Walmart gift cards and, nonfungible tokens, according to the complaint.

On the 31st of January, law enforcement officials gained access to Mr. Lichtenstein’s wallet. They gained access after they obtained a search warrant that gave them entry to encrypted files in Mr. Lichtenstein’s cloud storage account.

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