Federal authorities arrested a couple in New York City early Tuesday for allegedly conspiring to launder roughly $4.5 billion in cryptocurrency stolen during the 2016 hack of a digital asset exchange, the Department of Justice (DOJ) announced.
Ilya Lichtenstein, 34, and Heather Morgan, 31, both of New York, allegedly concocted an elaborate money-laundering scheme using multiple fake identities and bitcoin addresses to hide the stolen money, according to court documents filed by Internal Revenue Service (IRS) agent Christopher Janczewski, who investigated the case.
The funds were from a 2016 hack of virtual currency exchange Bitfinex, based in Hong Kong.
Lichtenstein and Morgan face up to 20 years in prison if convicted on charges of conspiracy to commit money laundering and conspiracy to defraud the U.S., according to the DOJ.
IRS agents were able to track Lichtenstein and Morgan by tracing cryptocurrency transactions between wallets known to be controlled by the couple, according to court documents.
“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa O. Monaco. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. 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.”
“Today, federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes.”
“In a methodical and calculated scheme, the defendants allegedly laundered and disguised their vast fortune,” Jim Lee, chief of IRS-Criminal Investigation (IRS-CI), said in a statement. “IRS-CI Cyber Crimes Unit special agents have once again unraveled a sophisticated laundering technique, enabling them to trace, access and seize the stolen funds, which has amounted to the largest cryptocurrency seizure to date, valued at more than $3.6 billion.”
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