Bitfinex Hacker Gets 5-Year Sentence for Billion-Dollar Crypto Laundering

On Thursday, the United States Department of Justice (DOJ) announced that Ilya Lichtenstein was sentenced to five years for stealing approximately 120,000 Bitcoin (BTC) from the cryptocurrency exchange Bitfinex.

Bitfinex Hacker Sentenced in Money Laundering Conspiracy Involving Billions in Stolen Cryptocurrency https://t.co/34p6j4DmOM @DOJCrimDiv @IRS_CI @FBIChicago @HSINewYork

— U.S. Attorney DC (@USAO_DC) November 14, 2024

At the current market price of $88,789 per BTC, the stolen funds are valued at over $10 billion. According to CoinGecko, the current price reflects a 5.73% decline from BTC’s all-time high of $93,477, recorded on November 13.

Lichtenstein Gets 5-Year Sentence

In 2016, the 35-year-old hacked Bitfinex’s network using advanced tools, executing over 2,000 fraudulent transactions to transfer 119,754 BTC to his wallet. He later deleted network credentials and log files to hide his actions, laundering part of the stolen funds with his wife, Heather Morgan.

According to Bloomberg, Lichtenstein, who was initially facing up to 20 years, received a reduced sentence for cooperating as a key witness in multiple cybercrime cases. He was sentenced to five years in prison and three years of supervised release. Meanwhile, his wife, Heather Morgan, is scheduled for sentencing on November 18, with prosecutors recommending an 18-month term.

Initially accused only of laundering the stolen Bitcoin, Lichtenstein confessed to carrying out the Bitfinex hack. Despite his admission, neither he nor Morgan were charged for hacking. Instead, both pleaded guilty in August 2023 to one count of conspiracy to commit money laundering, a crime punishable by up to 20 years in prison.

The “Chain Hopping” Strategy

The couple’s strategies included automating transactions with specialized software, depositing stolen funds into darknet markets and crypto exchanges, and withdrawing them in different forms of cryptocurrency through “chain hopping.” They also funneled proceeds into U.S.-based business accounts to legitimize their banking activity and convert some funds into gold coins.

Court documents reveal the couple laundered 25,111 BTC—around 21% of the stolen amount—by leveraging a network of Eastern European bank accounts and cryptocurrency mixers to conceal the funds’ origins. The DOJ noted their techniques were among the most intricate money-laundering methods ever encountered by IRS agents.