US seizes $3.6bn in cryptocurrency allegedly stolen in hack
By Andrew Knoll
23:19, 8 February 2022
Following the money has seldom been tougher than in the era of blockchains, but a growing number of American authorities each have their methods.
On Tuesday, the US Department of Justice (DOJ) announced it had seized a record $3.6bn (£2.7bn) in cryptocurrency from a married couple in New York, whom authorities arrested and charged in connection with a 2016 hack of Hong Kong-based Bitfinex’s virtual coins totalling some $4.5bn in current value.
“Today’s arrests, which represented the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said deputy attorney general Lisa Monaco. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions.”
The case
Ilya Lichenstein, 34, and Heather Morgan, 31, were arrested in New York and charged with conspiracy to commit money laundering and conspiracy to defraud the United States, DOJ officials said on Tuesday.
The couple allegedly conspired to launder nearly 120,000 bitcoins pilfered in a hack that engendered more than 2,000 fraudulent transactions. In the more than five years since the incident, the DOJ said the couple allegedly liquidated the virtual currency to purchase items ranging from gold to NFTs to Walmart gift cards. Their methods included establishing fictitious online identities and writing computer programmes designed to facilitate money laundering.
“We will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said assistant attorney general Kenneth Polite Jr of the Justice Department’s Criminal Division. “The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes.”
Evolving techniques
As criminals have developed new techniques to use blockchain to launder proceeds from illegal activity, law enforcement has begun to pursue such moving targets with greater speed and agility.
Last year, the DOJ formed a federal cryptocurrency unit. Authorities clawed back about $2.3m (£1.7m) that had been paid in ransom during the heavily disruptive Colonial Pipeline hack.
The FBI, Secret Service, Department of Treasury and other federal agencies have all become involved to varying extents in the pursuit of crimes related to virtual currency.
“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead,” said FBI deputy director Paul Abbate.
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