A New York man has made a significant revelation, admitting to being the original hacker in the 2016 cyberattack on Bitfinex, which resulted in the theft of bitcoin worth a staggering $4.5 billion. Ilya “Dutch” Lichtenstein, the hacker, pleaded guilty to conspiracy to launder the stolen cryptocurrency in a federal court in Washington, D.C. This disclosure marks the first public acknowledgment of the individual responsible for the hack on the cryptocurrency exchange Bitfinex.
Massive Bitfinex Hack in 2016: What Happened?
During the 2016 hack, approximately 119,752 Bitcoins were stolen from Bitfinex, valued at around $72 million at the time. However, the stolen crypto’s value has now surged to approximately $4.5 billion. The hackers strategically directed the funds from individual users’ wallets to a single wallet, where the majority of the funds remained untouched. Only when they began moving the funds into the traditional financial system did investigators gain a breakthrough in the case.
Initially, both defendants were released on bond in New York City, but a federal judge later deemed them “sophisticated defendants” and potential flight risks, leading to their detention. Ilya “Dutch” Lichtenstein, a dual citizen of the US and Russia, was found to possess stolen biographical data from the dark web, raising further concerns about his intentions. His wife, Heather Rhiannon Morgan, had been learning Russian, and they had been setting up bank accounts in Russia and Ukraine.
During a search of their apartment, law enforcement recovered “burner phones” and other suspicious items, including hollowed-out books, $40,000 in cash, and foreign currency. However, 70 ounces of gold coins suspected to have been purchased with the stolen crypto have not been found. Investigators believe that the couple is still concealing around $330 million worth of Bitcoin and significant volumes of other assets. Despite their efforts to resist, authorities managed to secure crucial evidence during the raid.
A Guilty Plea with Startling Revelations
During the court proceedings, Ilya “Dutch” Lichtenstein admitted to his role in the 2016 Bitcoin hack on Bitfinex, which resulted in the theft of $4.5 billion worth of cryptocurrency. The hacker’s guilty plea came before his wife, Heather Rhiannon Morgan, who also pleaded guilty to money laundering conspiracy and conspiracy to defraud the U.S. government. Until this revelation, the identity of the hacker responsible for the cyberattack remained undisclosed.
The Ongoing Legal Battle and Subsequent Seizures
Despite admitting to being the hacker behind the Bitfinex hack, Lichtenstein and Morgan were not charged in connection with the actual cyberattack. Lichtenstein now faces a maximum possible sentence of 20 years in prison for his involvement in the conspiracy to commit money laundering. Meanwhile, Heather Rhiannon Morgan, an aspiring rapper known as “Razzlekahn” and “The Crocodile of Wall Street,” could face up to five years in prison.
During their arrest in February 2022, the Department of Justice seized over 94,000 bitcoin, worth approximately $3.6 billion at the time. Following their guilty pleas, the government has managed to seize another $475 million linked to the hack, making it the largest seizure in the DOJ’s history.
A Noteworthy Hacking Operation and Laundering Scheme
Ilya Lichtenstein utilized advanced hacking tools and techniques to gain unauthorized access to Bitfinex’s network, where he fraudulently authorized over 2,000 transactions, transferring 119,754 bitcoin to a cryptocurrency wallet under his control. To cover his tracks, Lichtenstein returned to Bitfinex’s network, deleting access credentials and log files that might have revealed his actions to law enforcement. In a complex money laundering process involving his wife’s assistance, Lichtenstein managed to transfer 25,000 stolen bitcoin from his wallet to various financial accounts they controlled.
The guilty pleas by Ilya “Dutch” Lichtenstein and his wife, Heather Rhiannon Morgan, bring to light a critical development in the case of the Bitfinex hack. While the identity of the original hacker is now known, the legal battle against the couple continues as they face potential imprisonment for their roles in the money laundering conspiracy. As authorities pursue justice and the return of stolen assets, the cryptocurrency community will closely watch the unfolding legal proceedings.