Ilya Lichtenstein, 35, of New York City, was sentenced on Nov. 14 in U.S. District Court in Washington D.C. to 60 months in federal prison for his involvement in a money laundering conspiracy arising from the hack and theft of approximately 120,000 bitcoin from Bitfinex, a global cryptocurrency exchange.
Homeland Security Investigations (HSI) New York Special Agent in Charge William S. Walker announced the sentence, alongside Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, U.S. Attorney Matthew M. Graves for the District of Columbia; Chief Guy Ficco of IRS Criminal Investigation; Assistant Director Bryan Vorndran of the FBI’s Cyber Division; and FBI Special Agent in Charge Robert W. “Wes” Wheeler, of the Chicago Field Office.
According to the investigation and outlined in court documents:
Lichtenstein hacked into Bitfinex’s network in 2016, using advanced hacking tools and techniques. Once inside the network, Lichtenstein fraudulently authorized more than 2,000 transactions transferring 119,754 bitcoin from Bitfinex to a cryptocurrency wallet in Lichtenstein’s control. Lichtenstein then took steps to cover his tracks by deleting from Bitfinex’s network access credentials and other log files that could have revealed his conduct to law enforcement. Following the hack, Lichtenstein enlisted the help of his wife, Heather Morgan, in laundering the stolen funds.
Lichtenstein, at times with Morgan’s assistance, employed numerous sophisticated laundering techniques, including using fictitious identities to set up online accounts; utilizing computer programs to automate transactions; depositing the stolen funds into accounts at a variety of darknet markets and cryptocurrency exchanges and then withdrawing the funds; converting bitcoin to other forms of cryptocurrency in a practice known as “chain hopping;” depositing a portion of the criminal proceeds into cryptocurrency mixing services; using U.S.-based business accounts to legitimize Lichtenstein’s and Morgan’s banking activity; and exchanging a portion of the stolen funds into gold coins.
On Aug. 3, 2023, Lichtenstein and Morgan both pleaded guilty to one count of conspiracy to commit money laundering. In addition to his term of imprisonment, Lichtenstein was ordered to serve three years of supervised release.
The HSI New York Field Office; IRS-CI Washington D.C. Cyber Crimes Unit; FBI Chicago Field Office; and FBI Virtual Assets Unit; are investigating the case, with assistance from the Justice Department’s Office of International Affairs and the Ansbach Police Department in Germany.
The original announcement can be found here.