Good Morning Everyone,
The US department of Justice has made its largest financial seizure ever, seizing approximately 94,000 bitcoin in relation the 2016 Bitfinex exchange hack. The original hack resulted in approximately 2000 unauthorized transactions totaling nearly 120,000 bitcoin, worth around $70m US dollars at the time.
In a public statement the US DOJ wrote:
“Two individuals were arrested this morning in Manhattan for an alleged conspiracy to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, a virtual currency exchange, presently valued at approximately $4.5 billion. Thus far, law enforcement has seized over $3.6 billion in cryptocurrency linked to that hack.”
“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa O. Monaco. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”
The two individuals arrested were married couple Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31.
The document goes onto outline some of the specifics leading to the seizure:
“According to court documents, Lichtenstein and Morgan allegedly conspired to launder the proceeds of 119,754 bitcoin that were stolen from Bitfinex’s platform after a hacker breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions. Those unauthorized transactions sent the stolen bitcoin to a digital wallet under Lichtenstein’s control. Over the last five years, approximately 25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan. The remainder of the stolen funds, comprising more than 94,000 bitcoin, remained in the wallet used to receive and store the illegal proceeds from the hack. After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex. The recovered bitcoin was valued at over $3.6 billion at the time of seizure.”
There is a ton of debate on bitcoin twitter, as to whether or not this story really checks out, as the notion that someone who stole 120,000 bitcoin from an exchange would store their keys online on a cloud platform like icloud, google or dropbox is difficult to believe. Then when you look a little deeper at some of their online content it gets really weird.
As you can see this post from Lichtenstein about security, where he said:
Or this one from Heather Morgan:
Either way. The seizure has been made, and the US now holds more than 94,000 bitcoin - more than any other country on earth, that we know of. According to bitcointreasuries.net the next largest holding is the Ukraine with some 46,000 btc.
Presumably the captured bitcoin will be returned to Bitfinex whom they were stolen from, but this remains to be seen.
This should act as a good reminder for us all. Not your keys, not your cheese.
Your keys in many sense are your bitcoin. These keys should never been put on a computer. They should definitely never be stored online, and they should not be shared with anyone. Ever.
It is only when you hold your bitcoin securely, that it is impossible to confiscate, and over the coming years I believe this property is going to become ever critical.
Hope you all have a great day, and i’ll talk to you tomorrow.
AK
