In a significant development concerning one of the largest cryptocurrency heists in history, U.S. prosecutors have formally requested that a federal judge authorize the return of approximately 80% of the stolen bitcoins from the 2016 Bitfinex hack. The court filing highlights the recovery of 94,643 bitcoins that were traced back to the original wallet used by the perpetrator, Ilya Lichtenstein.
This move comes in light of Lichtenstein’s conviction, where he was sentenced to five years in prison after pleading guilty to conspiracy to commit money laundering. His wife, Heather Morgan, popularly known as Razzlekhan, received an 18-month sentence for her involvement in laundering a portion of the hack’s proceeds. As part of their plea agreements, both individuals have consented to forfeit the stolen cryptocurrencies.
The recovered bitcoins are set to be compensated to Bitfinex as restitution in-kind, pending the court’s approval. In addition to the bitcoins, the filing indicates that Bitcoin Cash, Bitcoin Satoshi Vision, and Bitcoin Gold—resulting from several hard forks since the hack—will also be returned to Bitfinex.
However, the process of returning the remaining 25,000 bitcoins presents additional complexities. Prosecutors noted that Lichtenstein and Morgan utilized intricate methods to launder these remaining coins, employing a range of sophisticated techniques. These included peel chain transactions, unregulated cryptocurrency exchanges, and anonymizing services known as mixers and tumblers.
As these transactions cannot be directly traced back to the specific property lost in the heist, the prosecutors are seeking a separate forfeiture proceeding to reclaim the remaining bitcoins. This highlights both the challenges inherent in cryptocurrency recovery efforts and the ongoing legal complexities surrounding digital currencies.
The outcome of this case may set critical precedents for handling cryptocurrency theft and recovery in the future, particularly as digital currencies continue to gain mainstream acceptance and usage.
