The Justice Department announced Tuesday it had seized more than $3.6 billion in bitcoin allegedly stolen as part of a 2016 hack of Bitfinex, saying authorities have also arrested a husband and wife in New York for allegedly trying to launder the cryptocurrency fortune.
Officials said Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, were charged with conspiring to launder money. They are accused of trying to launder 119,754 bitcoin that were stolen after a hacker breached the cryptocurrency exchange Bitfinex and initiated more than 2,000 unauthorized transactions. Prosecutors said the bitcoin was sent to a digital wallet controlled by Lichtenstein.
At the time of the theft, that amount of bitcoin was worth about $71 million. But the cryptocurrency has appreciated so much in the years since that the total value is now around $4.5 billion. Federal officials said they were able to seize about 94,000 of the stolen bitcoin, with an estimated value of $3.6 billion.
The case marks the largest single seizure of funds in the Justice Department history, officials said, and is the most high-profile prosecution to emerge from the agency’s newly-announced effort to investigate crimes involving cryptocurrency.
“Cryptocurrency is not a safe haven for criminals,” Deputy Attorney General Lisa O. Monaco said in a written statement that accused Lichtenstein and Morgan of trying to launder the stolen bitcoin “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 the form it takes,” Monaco said.
Bitfinex had previously offered a reward potentially worth hundreds of millions of dollars for information leading to the return of the stolen funds. U.S. officials would not say if that reward offer played a role in the government’s case against Lichtenstein and Morgan.
Court papers filed against the couple did not accuse them of the hack itself; officials declined to say if the pair are suspected of stealing the money.
Lichtenstein, a tech entrepreneur who goes by the nickname “Dutch” and holds both U.S. and Russian citizenship, according to court papers, describes himself online as an “angel investor.”
An affidavit filed by an IRS agent against the couple alleges that they spent only a small fraction of the stolen money, some of it on gold and some on non-fungible tokens, or NFTs, a unique digital representation that is sold or traded as a work of art or collectible.
U.S. officials said that because the funds were seized pursuant to a court order, a judge would ultimately decide how the recovered money would be distributed, but also that the government would seek to return funds to the rightful owners.
“We have been cooperating extensively with the DOJ since its investigation began and will continue to do so,” Bitfinex said in a written statement. The company pledged to “follow appropriate legal processes to establish our rights to a return of the stolen bitcoin.”
Bitcoin is the most popular form of cryptocurrency, which is a computer code generated by publicly available software that allows people to store and send value online. The open-source code originated with bitcoin over a decade ago and runs on an extensive network of private computers around the globe.
The value of a cryptocurrency is typically expressed in dollars and is set by public trading conducted by exchange houses; those values can fluctuate wildly. Bitcoin touched a high of about $69,000 in early November before plunging to about $35,000 last month. It has recovered somewhat and is now trading around $43,000, according to CoinMarketCap.
Tory Newmeyer contributed to this report.
