Laundering over $4.5 billion in funds derived from the 2016 hack of Bitfinex, the most fascinating story in the digital assets sector this week comes from husband-wife duo Ilya Lichtenstein and Heather Morgan. This led to the U.S. Department of Justice raiding the couple’s condo in New York and having them arrested immediately.
The fascinating story has shed some light on that cryptocurrency heist from six years ago but also raised new questions about the industry’s transparency. Here are some of the highlights from this affair.
Bifinex: the biggest haul in crypto history
Feds report that Lichtenstein and Morgan held nearly 120,000 Bitcoin in digital wallets when they were arrested. At the current market price, that collection is worth a jaw-dropping $4.5 billion. However, the feds haven’t claimed that the couple was responsible for the Bitfinex hack. Instead, they’ve been charged with trying to launder the digital tokens via Walmart gift cards, NFTs, and gold.
Back in 2016, Bitcoin was worth significantly less, and the 120,000 tokens were collectively worth only $72 million.
Bitcoin’s traceability
According to the complaint submitted by federal agents, the couple tried to break their BTC holdings into small amounts and launder them through transactions on the dark web. The platform they used for this activity, AlphaBay, was seized by the Justice Department in 2017. After gaining access to AlphaBay’s servers, the agents were able to identify over 200,000 users buying and selling stolen identification documents, counterfeit goods, malware, firearms, and other illicit goods on the platform.
Lichtenstein and Morgan had set up several profiles on the site, and the agents were able to link them to the Bitfinex hack by tracking transactions on Bitcoin’s public ledger. Their flowchart is presented below:
Source: Department of Justice
The fact that authorities could track transactions despite the use of privacy tokens like Monero and deep web platforms goes to show that digital tokens aren’t an effective tool for money laundering, as is widely believed.
Ilya and Heather’s digital footprint
What’s caught the attention of the community is the bizarre and widespread footprint of the couple. Ilya, who goes by “Dutch” online, is said to have had contact with several crypto influencers in recent years. Morgan, meanwhile, is an amateur rapper, Bitcoin advocate, and contributing writer for Forbes.
Their online presence has garnered so much attention that streaming giant Netflix has now purchased the rights to their story for an upcoming documentary.
