https://ift.tt/1IV7mln
Topline
U.S. authorities arrested a New York City couple Tuesday for allegedly conspiring to launder $4.5 billion worth of bitcoin stolen during a hack of cryptocurrency exchange Bitfinex in 2016, $3.6 billion of which federal authorities have recovered in what the Department of Justice is calling the largest financial seizure ever.
Bitcoin prices fell sharply after news of the seizure, which authorities called their largest ever.
getty
Key Facts
According to court filings, 34-year-old Ilya Lichtenstein and his wife, Heather Morgan, 31, conspired to launder the proceeds of 119,754 bitcoins—currently worth about $5 billion—that were stolen from the Bitfinex platform after a breach of the cryptocurrency exchange’s systems in 2016.
At the time, the unnamed hacker allegedly made more than 2,000 unauthorized transactions transferring the stolen cryptocurrency to a digital wallet under Lichntenstein’s control, authorities said Tuesday.
They allege Lichentenstein and Morgan then employed “numerous sophisticated laundering techniques”—including using fake identities to set up online accounts and running computer programs to automate transactions—to transfer about 25,000 stolen coins out of the wallet and into financial accounts jointly controlled by the couple over the next five years.
According to the DOJ on Tuesday, special agents obtained court-authorized search warrants to go through the couple’s online accounts and were able to find files containing the private keys required to access a digital wallet containing 94,000 bitcoins representing about $3.6 billion in stolen funds.
In a statement, Deputy Attorney General Lisa Monaco said the recovered funds marked the DOJ’s “largest financial seizure ever” and called the case proof that “cryptocurrency is not a safe haven for criminals.”
The couple has been charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and conspiracy to defraud the United States, which carries a maximum sentence of five years.
Tangent
The price of bitcoin pared recent gains after the announcement, falling nearly 2% to $42,910.
Crucial Quote
“Cryptocurrency and the virtual currency exchanges trading in it comprise an expanding part of the U.S. financial system, but digital currency heists executed through complex money laundering schemes could undermine confidence in cryptocurrency,” U.S. Attorney Matthew M. Graves said in a Tuesday statement.
Key Background
Ransomware attacks on Colonial Pipeline and meatpacker JBS, which sparked widespread gasoline shortages and meat-plant shutdowns, placed a massive spotlight on anonymity concerns last summer. In both instances, the companies paid millions in bitcoin to hackers taking advantage of the cryptocurrency’s anonymized transactions. “The only way you can begin to get on top of the pervasive” ransomware problem is “to develop a pattern,” Sen. Roy Blunt (R-Mo.) said last summer after the DOJ seized $2.3 million in bitcoin as part of its investigation into Colonial Pipeline. At the time, Blunt called cryptocurrencies the “ransom payment of choice” for hackers and said lawmakers shouldn’t allow cryptocurrencies to operate “behind the scenes.”
What To Watch For
President Joe Biden is reportedly slated to release an executive order that will task federal agencies with regulating cryptocurrencies as a matter of national security as soon as this month.
Further Reading
U.S. Recovers Millions In Bitcoin Paid During The Colonial Pipeline Attack (Forbes)
Financial Services
