In 2016, the Bitfinex crypto exchange was hacked and 120,000 BTC valued at $72 million at the time was stolen. Since then, the trail has gone cold. However, the exchange has been actively pursuing the BTC since then.
On The Trail Of The Hackers
In 2020, Bitfinex issued a $400 million reward for the recovery of the BTC, whose value had since skyrocketed to be worth over a billion dollars. Bitfinex said that it had managed to recover around 27 BTC stolen in the 2016 hack. At the time of the hack, Bitfinex was the biggest Bitcoin USD exchange in the world. The hack was so massive at the time that it caused BTC prices to plummet. Bitfinex temporarily shut down its site as it investigated the hack.
How The BTC Was Stolen
According to a DoJ report, hackers broke into the exchange and conducted over 2000 unauthorized BTC transactions where they managed to illegally move 119,754 BTC out of the exchange. The hackers began moving the stolen BTC in 2017 via several small, and complex transactions, whose intention appears to have been to conceal the origin of the BTC.
Majority Of The Loot Finally Recovered
After a long investigation that has been ongoing since 2016, the Department of Justice announced on Wednesday, February 9, 2022, that it had recovered a bulk of the stolen BTC. According to the DoJ announcement, a couple was arrested in connection with the theft of the BTC. The announcement noted that while the BTC stolen in 2016 is currently valued at $4.5 billion, they have managed to recover over $3.6 billion.
Despite the efforts to conceal the transactions, the authorities were able to trace the funds to accounts controlled by a couple. The couple’s names are Ilya “Dutch” Lichtenstein, a Russia-US dual citizen who lives in NY, and his wife Heather Morgan.
Despite making numerous transactions in 2017, the majority of the stolen BTC remained in the original wallet they were deposited in. On January 31, 2022, the authorities gained access to the crypto wallet by decrypting a file stored in Lichtenstein’s cloud storage account. In the wallet, they found a list of 2000 crypto addresses and their private keys.
An analysis of the crypto addresses found that 110 of them were directly linked to the 2016 hack. The authorities then obtained approval to seize the funds in the wallets, which was 94,636 BTC valued at around $3.629 billion. Those funds are now in possession of the federal government. In the report, the authorities did not find that any other parties helped the pair carry out the heist.
The Punishment
Lichtenstein and his wife face up to 25 years in prison. They have been charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years, and conspiracy to defraud the United States, which carries a maximum sentence of five years. The sentences they serve will be determined by a federal district court judge under US Sentencing Guidelines, and other statutory factors.
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