The Justice Department of the US announces that it recovered over 94,000 stolen bitcoin, worth $3.6 billion, a record haul.
A couple accused of seeking to launder the bitcoin was arrested in New York, the department said. Ilya Lichtenstein, 34, and his wife Heather Morgan, 31, were set to appear in federal court over the charges later in the day.
They face up to 20 years in prison.
Lichtenstein and Morgan allegedly sought to launder the proceeds of 119,754 bitcoin — then valued at $65 million — that was stolen during a 2016 hack of the virtual currency exchange Bitfinex.
“Today’s arrests, and the Department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” deputy attorney general Lisa Monaco said in the statement.
Prosecutors said some of the stolen cryptocurrency was sent to a digital wallet controlled by Lichtenstein, who describes himself on social media as a “technology entrepreneur, coder, and investor.”
Gold and NFTs
About 25,000 of the stolen bitcoins were transferred out of the wallet over the next five years “through a labyrinth of cryptocurrency transactions,” and some of the funds were deposited into accounts the couple opened online, including by using false identities.
One of Morgan’s aliases is “Razzlekhan.” A video posted online under that name shows a young blonde woman rapping near the New York Stock Exchange.
In the song, the woman refers to herself as a “crocodile of Wall Street” and a “risk-taker.”
The couple combined “old-fashioned methods” and “very complex transactions,” a prosecutor said at a press briefing.
The funds were used to buy items such as gold or digital NFTs (non-fungible tokens), according to US officials.
The remaining bitcoin, now valued at $3.6 billion, was recovered last week by US investigators.
They executed a search warrant to scour the couple’s online accounts and were able to recover the security key that gave them access to the digital wallet.
Bitfinex has offered a multimillion-dollar reward for information leading to the recovery of the stolen funds, but the Justice Department declined to say whether that played a role in the arrest of Lichtenstein and Morgan.
Zone of lawlessness
Authorities had called on victims of the initial theft to come forward in order to recover their losses.
The investigation continues, the Justice Department said, declining to comment on who was behind the initial hack.
This case “demonstrates once again that we can follow the money through the blockchain,” said assistant attorney general Kenneth Polite Jr, referring to a decentralized technology for storing and transmitting information, “and that we will not allow cryptocurrency to be… a zone of lawlessness within our financial system.”
Although the cryptocurrency, Bitcoin, attracts a lot of reputed financial investors, it also allows for an easy entry of criminal networks to make their financial flows hidden from the legal authorities.
