At today’s prices, the computer expert who stole bitcoin worth billions of dollars spent years laundering some of the stolen cryptocurrency with the help of his wife. On Thursday, he was given a five-year prison sentence.
Federal prosecutors say that Ilya Lichtenstein planned one of the biggest thefts from a virtual currency exchange ever, and then he and his wife, Heather Rhiannon Morgan, used a complicated plan to get rid of the stolen money.
Judge Colleen Kollar-Kotelly of the U.S. District Court told Lichtenstein that his theft was “carefully planned” and not something he did without thinking.
It’s important to let people know that these crimes will not go unpunished, that there are consequences, she said.
Lichtenstein said he felt bad about “wasting my talents on crime instead of making a positive contribution to society.” He should be able to use the two years and nine months he has been in jail since his arrest in February 2022. He said that he hopes to be able to fight cybercrime with the skills he has gained while in prison.
‘I want to make up for what I did and take full responsibility for it,’ he said.
Morgan’s sentence is set for Monday by the judge. Lichtenstein begged the judge not to put his wife in jail, saying that he was to blame for her involvement.
Lichtenstein broke into the Bitfinex virtual currency exchange in Hong Kong in August 2016 and stole about 120,000 bitcoin. Prosecutors say it is worth more than $7.6 billion according to current market prices and was worth about $71 million when it was hacked.
After a few months, Lichtenstein started moving the stolen bitcoin through a series of complicated transactions that were meant to hide its path through different accounts and platforms. He asked his wife to help him clean up the stolen money.
Lichtenstein is an Uber driver and cryptocurrency investor. He was born in Russia but grew up in a suburb of Chicago and is now a U.S. citizen. Morgan, who owns a business and writes, changed her name to “Razzlekhan” to perform rap songs and make music videos.
Lichtenstein and Morgan were caught in New York City in February 2022. We were living there. Around the time of the hack, they were living in San Francisco.
Lichtenstein pleaded guilty in August 2023 to one count of money laundering conspiracy. The prosecutors wanted to put him in prison for five years. They said Morgan, who pleaded guilty to the same charge, should spend 18 months in prison.
“Neither the hack nor the money-laundering scheme was made on the spur of the moment.” In their letter, the prosecutors said that Lichtenstein spent months trying to get into Bitfinex’s systems and get the access and permissions he needed to plan his hack.
Lichtenstein told his wife about the hack more than three years later, but prosecutors say he first asked her to help him launder the money “without explaining exactly what he was doing.”
Police wrote that Morgan “was certainly a willing participant and bears full responsibility for her actions, but she was a lower-level participant.”
Lichtenstein met couriers in Kazakhstan and Ukraine while traveling with his family. They brought him money that he sneaked back into the U.S.
“The defendant used what IRS agents called the most complex money laundering methods they had ever seen over the course of five years,” prosecutors wrote.
Bitcoin is the first and biggest cryptocurrency. Cryptocurrencies are digital currencies that aren’t backed by the government or banks. A technology called a blockchain keeps track of transactions.
The couple was able to clean about 21% of the money that was stolen from Bitfinex. At today’s prices, the money that was laundered was worth at least $14 million. When they were caught in 2022, it was worth more than $1 billion.
The rest of the money, which is worth more than $6 billion now, was taken by the authorities.
“He turned into one of the most dangerous money launderers the government has seen in the cryptocurrency space,” prosecutors wrote.
Bitfinex’s lawyer said the hack “devastated” the company’s finances and reputation with its customers. At the time of the theft, the stolen funds made up about 36% of the company’s assets.
According to Barry Berke, the lawyer, Bitfinex had to act right away and in a way that had never been done before to make sure that any losses from the Hack would be paid for by Bitfinex and its shareholders and not by its customers.
A prosecutor said that Lichtenstein started working with federal authorities right away after he was arrested, helping them with other investigations into cybercrime.
Defense lawyer Samson Enzer says that with help from Lichtenstein, more than 96% of the stolen money has been found. The lawyer said that the “vast bulk” of the stolen money was never spent.
He said, “This is not a bad person.” “This person was good, but they did some terrible things.”
