In a significant legal development, U.S. prosecutors have petitioned a federal judge to authorize the restitution of approximately 80% of the 119,754 bitcoins stolen during the 2016 Bitfinex hack. This move underscores the government’s commitment to rectifying one of the most substantial cryptocurrency thefts to date.
The Department of Justice (DOJ) has identified Bitfinex as the primary victim eligible for restitution, following the 2016 breach that resulted in the loss of nearly 120,000 bitcoins, now valued at approximately $7.4 billion.
In a recent court filing, prosecutors indicated that the 94,643 bitcoins recovered from the original wallet used by hacker Ilya Lichtenstein are poised to be returned to Bitfinex, pending judicial approval. Additionally, cryptocurrencies such as Bitcoin Cash, Bitcoin Satoshi Vision, and Bitcoin Gold, generated through hard forks post-hack, are slated for restitution.
Ilya Lichtenstein, who orchestrated the hack, was sentenced to five years in prison after pleading guilty to conspiracy to commit money laundering.
His wife, Heather Morgan—known in the music world as rapper Razzlekhan—received an 18-month sentence for her role in laundering a portion of the stolen funds.
Both have agreed to forfeit the misappropriated cryptocurrency as part of their plea agreements.
The restitution process for the remaining approximately 25,000 bitcoins presents complexities. Prosecutors noted that Lichtenstein and Morgan employed intricate and technologically advanced methods to launder these coins, including peel chain transactions, utilization of non-compliant virtual currency exchanges, darknet markets, mixers, tumblers, and commingling funds within their business and personal accounts. Due to these obfuscation tactics, these bitcoins cannot be distinctly identified as the specific property lost in the hack. Consequently, their return necessitates an ancillary forfeiture proceeding to ensure proper restitution.
This case highlights the challenges inherent in tracing and recovering digital assets within the cryptocurrency ecosystem. The DOJ’s efforts to return the majority of the stolen bitcoins to Bitfinex not only aim to rectify the financial harm inflicted but also serve as a deterrent against future cybercrimes targeting digital currencies. As the legal proceedings advance, the outcomes may set significant precedents for handling similar cases in the rapidly evolving landscape of cryptocurrency-related offenses.
👉Join our Trading Community’s newsletter!👈
Finally, if you learned something, give us some love 💗 and SHARE. 🔁