🌎 Prosecutors Seek 5 Years for Bitfinex Hack Mastermind Ilya Lichtenstein

US prosecutors have urged a Washington federal judge to sentence Ilya Lichtenstein, the mastermind behind the hack of the Bitfinex crypto exchange, to five years in prison for extracting 120,000 Bitcoin, valued at $8 billion.

Prosecutors Advocate for Severe Sentence

In an Oct. 15 court filing submitted to the US District Court of Columbia, prosecutors emphasized the need for a stricter sentence for Lichtenstein compared to his wife and accomplice, Heather Morgan. Morgan, also known as rapper “Razzlekhan,” has already pleaded guilty.

Prosecutors argued that a severe sentence would serve as a deterrent for other potential cyber criminals, noting that Lichtenstein’s online activities trivialized the impact on victims.

The Mastermind Behind the 2016 Bitfinex Hack

Lichtenstein was identified as the key figure responsible for the 2016 Bitfinex hack, extracting a total of 120,000 Bitcoin. He laundered the stolen funds with the help of his wife. The couple is scheduled to be sentenced in November.

Heather Morgan’s Sentence Recommendation

On Oct. 11, prosecutors recommended an 18-month prison sentence for Morgan, who referred to herself as the “Crocodile of Wall Street.” Morgan, who pleaded guilty to money-laundering conspiracy charges, provided significant assistance to the government.

Cooperation in Other Criminal Cases

Lichtenstein also cooperated in other criminal investigations, which influenced the prosecutors’ decision not to seek the maximum sentence. In February 2024, he testified as a government witness in a money-laundering trial involving a service called Bitcoin Fog.

Sophisticated Money-Laundering Techniques

According to prosecutors, Lichtenstein and Morgan employed advanced money-laundering methods to obscure their activities. These methods included withdrawing and depositing funds through unregulated crypto exchanges and darknet markets. They also used mixers and tumblers such as Bitcoin Fog, Helix, and ChipMixer to conceal their financial trail.

Heather Morgan’s Involvement

Morgan admitted to discovering her husband’s money-laundering scheme and the prior Bitfinex heist in 2020. She subsequently assisted him in hiding the funds through various means, including purchasing non-fungible tokens, gold, and Walmart gift cards.