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US English

US seizes $3.6bn in cryptocurrency allegedly stolen in hack

By Andrew Knoll

23:19, 8 February 2022

Illustration of a cryptocurrency hack
A couple was arrested for involvement in laundering cryptocurrency - Photo: Shutterstock

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.”


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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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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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