Ilya Lichtenstein sentenced to five years in prison for hacking into a virtual currency exchange Bitfinex and stealing 119,000 Bitcoin
Russia-born Ilya Lichtenstein has been sentenced to five years in prison, with his wife Heather Rhiannon Morgan due to be sentenced on Monday.
Lichtenstein has already admitted to stealing billions of dollars in Bitcoin from virtual currency Bitfinex back in 2016.
Lichtenstein made the admission as part of a plea deal with US federal prosecutors, who had arrested Lichtenstein and his wife Heather Morgan in 2022 on charges of laundering the stolen funds.
Bitcoin laundering
At the time of their arrest in February 2022 prosecutors did not identify Lichtenstein as the hacker, saying only that the funds had been transferred into a cryptocurrency wallet under his control.
In August 2023 Lichtenstein pleaded guilty to one count of money laundering conspiracy.
The 119,000 stolen Bitcoins had been worth about $72m at the time of their theft in 2016.
Under a deal Lichtenstein and Morgan pleaded guilty to attempting to launder the cryptocoins, which had been worth about $4.5 billion (£3.5bn) in 2022 when the couple were arrested, making it the largest financial seizure in the history of the US Justice Department.
However those Bitcoins would now be valued at more than $7.6 billion based on current market prices, the Associated Press reported prosecutors as saying.
Federal prosecutors said that Lichtenstein had masterminded one of the largest-ever thefts from a virtual currency exchange before he and his wife, Heather Rhiannon Morgan, carried out an elaborate scheme to liquidate the stolen funds.
According to AP, the couple successfully laundered about 21 percent of the funds stolen from Bitfinex.
But over 96 percent of the stolen funds have been recovered, with help from Lichtenstein, according to defence attorney Samson Enzer.
The “vast bulk” of the stolen money was never spent, the lawyer said.
“This is not an evil person,” Enzer said. “This is a good person who made some very bad mistakes.”
Prison sentence
But US District Judge Colleen Kollar-Kotelly reportedly told Lichtenstein that his theft was “meticulously planned” and not an impulsive act.
“It’s important to send a message that you can’t commit these crimes with impunity, that there are consequences to them,” she was quoted as saying by AP.
Lichtenstein gets credit for the two years and nine months that he has spent in jail since his February 2022 arrest, and he expressed remorse for “wasting my talents on crime instead of a positive contribution to society.”
He reportedly said he hopes that he can apply his expertise to fight cybercrime when he gets out of prison.
“I want to take full responsibility for my actions and make amends any way I can,” he reportedly said, before pleading for his wife Morgan, who is due to be sentenced on Monday, to be spared from prison, blaming himself for her involvement.
Morgan, who pleaded guilty to an additional count of conspiracy to defraud the United States, faces a prison sentence of up to 10 years, while Lichtenstein could have been imprisoned for a maximum of 20 years.
Prosecutors however recommended a five-year prison sentence for Lichtenstein. They had recommended an 18-month prison sentence for Morgan.
“Neither the hack nor the laundering scheme was an impulsive decision. The defendant (Lichtenstein) spent months attempting to gain access to Bitfinex’s infrastructure and get the accesses and permissions he needed in order to orchestrate his hack,” prosecutors wrote.
Several months later, Lichtenstein began moving the stolen bitcoin in a string of complex transactions designed to conceal its path across a series of accounts and platforms. He enlisted his wife’s help in cleaning the stolen funds.
The prosecutors also previously said that couple had converted some of the funds into physical gold coins, which Morgan buried.
