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Highlights
- Bitfinex hacker Ilya Lichtenstein is now a government witness
- Ilya is cooperating in another major laundering trial in Washington
- This is an unusual plot twist in a US-Crypto criminal case
In a plot twist, Ilya Lichtenstein, the popular Bitfinex hacker who was indicted alongside his wife Heather Morgan for stealing approximately 120,000 Bitcoin (BTC) in 2016, is now a witness for the United States government.
The Tale of The Bitfinex Hacker
As reported by Bloomberg, Lichtenstein appeared in court on Tuesday as a cooperating witness with the U.S. government on a money laundering case in Washington.
While he was there, he explained how he perpetrated the Bitcoin heist on the Bitfinex cryptocurrency exchange. He claimed to have gained access to Bitfinex for several months before he finally looted billions of dollars.
Additionally, the Soviet Russia-born 36-year-old man confirmed that he had also hacked some individual accounts on other crypto exchanges like Kraken and Coinbase. In an attempt to help the jury understand the motive behind the attack, the Bitfinex hacker explained that he had run into some financial troubles with his tech startup, hence the decision to exploit the exchange.
“At the time, my business was struggling and I was feeling very burnt out from it,” Lichtenstein explicitly explained to the jurors.
US Government Confiscates Stolen Crypto
Upon completing the heist, Lichtenstein employed the service of a system known as Bitcoin Fog to launder his loot. He claimed to have also deposited some of the money into crypto exchanges by using accounts in the name of other individuals that he purchased on the darknet.
While he noted that he stopped using Bitcoin Fog because of better alternatives he discovered, a total of $4.5 billion in Bitcoin was said to have been laundered by the couple at the time of their arrest.
Although the U.S. government was only able to seize about $3.6 billion, it happens to be the largest seizure in history. This informed the alarm raised by cybersecurity firm PeckShieldAlert in 2023 over a Bitcoin wallet containing approximately 94,643 BTC, which was said to be in the custody of the government.
Such seizures have contributed to the huge BTC holding of the U.S. government. It is one of the strategies that the government is using to tackle the problem of crypto hacks. The decision to use Lichtenstein as a witness may be another move from the U.S. government in this regard.
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