Washington/New York: The US Justice Department mentioned on Tuesday it has unraveled its biggest-ever cryptocurrency theft, seizing a record-shattering $3.6 billion in bitcoin tied to the 2016 hack of digital foreign money alternate Bitfinex and arresting a husband-and-wife crew on cash laundering expenses.
Ilya “Dutch” Lichtenstein, 34, and his spouse, Heather Morgan, 31, New Yorkers who have been arrested in Manhattan Tuesday morning, spent the unlawful proceeds on gadgets starting from gold and non-fungible tokens to a $500 Walmart present card, prosecutors mentioned .
The couple had lively public profiles, with Morgan often called rap singer “Razzlekhan,” a pseudonym that she mentioned on her web site referred to Genghis Khan “but with more pizzazz.”
It was the Justice Department`s largest monetary seizure, Deputy Attorney General Lisa Monaco mentioned, including in a press release that it reveals cryptocurrency is “not a safe haven for criminals.”
Lichtenstein and Morgan face expenses of conspiring to commit cash laundering in addition to to defraud the United States. The case was filed in a federal courtroom in Washington, DC
At their preliminary appearances in federal courtroom in Manhattan on Tuesday afternoon, US Magistrate Judge Debra Freeman set bond at $5 million for Lichtenstein and $3 million for Morgan and demanded that their dad and mom submit their houses as safety for his or her return to courtroom.
The pair is accused of conspiring to launder 119,754 bitcoin stolen after a hacker broke into Bitfinex and initiated greater than 2,000 unauthorized transactions. Justice Department officers mentioned the transactions on the time have been valued at $71 million in bitcoin, however with the rise within the foreign money`s worth, the worth now’s over $4.5 billion.
A key clue might have come from the 2017 bust of an underground digital market used to launder a portion of the funds. US officers mentioned among the cash was transferred to AlphaBay, an anything-goes model of eBay hosted on the darkish net.
When the positioning was taken down, it possible allowed authorities to entry AlphaBay`s inside transaction logs and join them to a cryptocurrency account in Lichtenstein`s identify, in line with digital foreign money monitoring firm Elliptic.
Bitfinex mentioned in a press release it was working with the Department of Justice to “establish our rights to a return of the stolen bitcoin.”
“PROTECT YOUR BUSINESS FROM CYBERCRIMINALS”
Lichtenstein and Morgan additionally tried to launder cash through a community of foreign money exchanges or claimed that the cash represented funds to Morgan`s startup, the Department of Justice mentioned.
In addition to her rap singer profile, Morgan had sidelines within the portray, vogue design, and writing worlds, the place she pitched herself as a type of company coach. One of her latest items was titled, partially, “Tips to Protect Your Business from Cybercriminals” and featured an interview with a cryptocurrency alternate proprietor about how you can stop fraud.
Morgan, sporting a white hoodie at her courtroom look, continuously glanced again at her dad and mom, who have been seated within the viewers of the courtroom. Both she and Lichtenstein, who holds twin US-Russian citizenship, nodded as Freeman warned them of extreme penalties in the event that they tried to flee.
They will each be positioned on home arrest, with digital monitoring, and can be barred from partaking in cryptocurrency transactions pending trial, Freeman mentioned. A choose in Washington, the place additional hearings can be held, might later set completely different situations, she mentioned.
Prosecutors sought to have each detained forward of trial, arguing they posed a flight danger. But Freeman mentioned she was swayed by protection lawyer Anirudh Bansal`s argument that each Lichtenstein and Morgan had recognized they have been below investigation since November and nonetheless remained within the United States.
Tuesday`s legal grievance got here greater than 4 months after Monaco introduced the division was launching a brand new National Cryptocurrency Enforcement Team, which contains a mixture of anti-money laundering and cybersecurity specialists.
Cyber criminals who assault corporations, municipalities and people with ransomware usually demand fee in cryptocurrency.
In one high-profile instance final yr, former companions and associates of the ransomware group REvil https://www.reuters.com/technology/exclusive-governments-turn-tables-ran… induced a widespread gasoline scarcity on the US East Coast when it used encryption software program referred to as DarkSide to launch a cyber assault on the Colonial Pipeline.
The Justice Department later recovered some $2.3 million in cryptocurrency ransom that Colonial paid to the hackers.
Cases like these reveal that the Justice Department “can follow money across the blockchain, just as we have always followed it within the traditional financial system,” mentioned Kenneth Polite, assistant lawyer normal of the division`s Criminal Division.