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Justice Dept. Seizes $3.6 Billion in Bitcoin and Arrests Married Couple

WASHINGTON — The Justice Division stated on Tuesday that it had seized over $3.6 billion price of stolen Bitcoin and arrested a married couple accused of laundering the cryptocurrency that hackers had stolen six years in the past.

The couple, Ilya Lichtenstein, 34, and Heather Morgan, 31, have been accused in a prison criticism of conspiring to launder 119,754 Bitcoin that had been stolen in 2016 from Hong Kong-based Bitfinex, one of many world’s largest digital foreign money exchanges.

The worth of the foreign money on the time of its seizure final week makes it the division’s largest monetary seizure ever, officers stated.

A Justice Division official declined to touch upon whether or not Mr. Lichtenstein and Ms. Morgan had been concerned within the hacking itself.

The breach in 2016 was amongst a spate of hackings into foreign money exchanges which have allowed for the theft of huge quantities of digital foreign money. Even when the stolen funds have been recovered, the thefts underscored the safety vulnerabilities within the comparatively new world of cryptocurrency. In some instances, the incidents drastically affected cryptocurrency values.

After the hacking of Bitfinex, one of many largest exchanges within the historical past of the cryptocurrency market, the worth of Bitcoin initially plunged about 20 p.c.

The arrests on Tuesday “present that cryptocurrency shouldn’t be a protected haven for criminals,” Lisa O. Monaco, the deputy lawyer normal, stated in an announcement. “In a futile effort to take care of digital anonymity, the defendants laundered stolen funds by way of a labyrinth of cryptocurrency transactions.”

Mr. Lichtenstein and Ms. Morgan appeared in a federal court docket in Manhattan on Tuesday afternoon.

Mr. Lichtenstein, who goes by the nickname Dutch, has each American and Russian citizenship and has described himself as a tech entrepreneur, in keeping with the criticism. Ms. Morgan describes herself on her LinkedIn web page as “a serial entrepreneur” and an “irreverent comedic rapper.” The criticism, which additionally expenses the couple with conspiracy to defraud the USA, suggests Ms. Morgan additionally goes by the alias Razzlekhan.

In line with court documents, the hacker who breached Bitfinex’s programs initiated 2,000 transactions to ship 119,754 stolen Bitcoin to a digital pockets that was below Mr. Lichtenstein’s management.

Over the past 5 years, about 25,000 of these Bitcoin have been transferred out of Mr. Lichtenstein’s pockets utilizing a sophisticated sequence of transactions meant to obscure that the foreign money had been stolen from Bitfinex, the Justice Division stated.

However investigators traced the motion of the Bitcoin on the blockchain, the everlasting fastened digital ledger that data every time a Bitcoin strikes to a brand new digital pockets. And a few of these funds have been ultimately deposited into monetary accounts managed by Mr. Lichtenstein and Ms. Morgan, in keeping with the division.

Regulation enforcement officers gained entry to Mr. Lichtenstein’s pockets on Jan. 31, after they obtained a search warrant that gave them entry to encrypted information in Mr. Lichtenstein’s cloud storage account.

The subsequent day, investigators seized the 94,636 Bitcoin that remained in that pockets, which have been price greater than $3.6 billion, in keeping with court docket papers. The entire 119,754 Bitcoin that have been stolen, price about $71 million when Bitfinex was hacked in 2016, are actually price greater than $4.5 billion, in keeping with the Justice Division.

The arrest reveals that “we is not going to enable cryptocurrency to be a protected haven for cash laundering or a zone of lawlessness inside our monetary system,” Kenneth A. Well mannered Jr., the top of the Justice Division’s prison division, stated in an announcement.

With extra Individuals shopping for and promoting cryptocurrencies like Bitcoin, regulators have introduced some giant exchanges in the USA below official oversight.

However cryptocurrencies transfer by way of decentralized laptop networks that aren’t below the management of any single authorities or firm, so most buying and selling nonetheless happens on largely unregulated exchanges like Bitfinex, which give shoppers little details about their operations.

The dearth of regulation has led to a number of issues on the planet of digital foreign money exchanges, threatening to impair client confidence in cryptocurrencies and to gradual widespread adoption. The primary Bitcoin change, Mt. Gox, collapsed in 2014 after hackers breached its safety programs and siphoned away $500 million in buyer cash.

And regulation enforcement officers have introduced criminal charges towards individuals who personal exchanges and are suspected of facilitating prison exercise.

Nathaniel Popper contributed reporting.

https://www.nytimes.com/2022/02/08/us/politics/ilya-lichtenstein-heather-morgan-bitcoin-laundering.html Justice Dept. Seizes $3.6 Billion in Bitcoin and Arrests Married Couple

Fry Electronics Team

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