The seizure is the largest in U.S. history.
The Department of Justice arrested two New Yorkers, who allegedly attempted to launder about $4.5 billion in cryptocurrencies, linked to the 2016 Bitfinex hack.
The U.S. government confiscated more than $3.6 billion worth of cryptocurrency linked to a widespread hack that occurred six years ago, making it the largest financial seizure in the history of the Department of Justice.
Arrested alongside the seizure were Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31. Lichtenstein and Morgan were arrested in Manhattan Tuesday morning and charged with conspiracy to commit money laundering. Authorities believe they are both linked to the 2016 hack of Bitfinex, an online digital currency exchange.
Law enforcement officials said that the seizure and arrests affirm that crimes like theft and money laundering cannot hide behind online anonymity, and that cryptocurrencies can still be traced.
“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 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.”
Court documents allege that Lichtenstein and Morgan conspired to launder the stolen bitcoin. Large volumes of bitcoin were routed and stored in a virtual wallet linked to Lichtenstein, which were eventually transferred into external financial accounts run by both Lichtenstein and Morgan.
Some of the alleged techniques Lichtenstein and Morgan used to launder the stolen cryptocurrency include using fraudulent personal and corporate identities, automating transactions, routing funds through darknet accounts, and converting the bitcoin to other digital currencies in an attempt to make it difficult to trace, a practice known as “chain hopping.”
“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead,” said FBI Deputy Director Paul Abbate. “Thanks to the persistent and dedicated work of our FBI Investigative teams and law enforcement partners, we're able to uncover the source of even the most sophisticated schemes and bring justice to those who try to exploit the security of our financial infrastructure.”
Major hacks and seizures with cryptocurrencies at their centers are key motivators behind President Joe Biden and Capitol Hill’s bids to regulate digital currencies. The White House is rumored to have plans to release a new government strategy and executive order to better understand cryptocurrency, while a coalition of representatives re-introduced a bill that aims to tax gains made from trading cryptocurrencies.
On the Hill, the House Committee on Sciences, Space and Technology conducted a hearing Tuesday focusing on how cryptocurrencies aid human trafficking operations.
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