On October 24, hackers compromised a wallet believed to be controlled by the U.S. government. In 2016, $20 million was leaked from a wallet containing funds seized in the Bitfinex hack.
According to Arkham Intelligence, the attackers sent funds to wallets starting with ‘0x348’ containing US Dollar Coin (USDC), Tether (USDT), aUSDC, and Ethereum (ETH).
The on-chain analytics firm also believes that hackers began converting stablecoins to ETH and laundering funds through addresses associated with money laundering services.
The attackers used funds seized by the US government in the 2016 Bitfinex hack, and perpetrators Ilya Lichtenstein and his wife Heather Morgan will be sentenced in November.
Malicious wallet behind the attack. Source: Arkham Intelligence
relevant: According to government filings, only Bitfinex is eligible for compensation for the 2016 hack.
Bitfinex hack in 2016
Lichtenstein and Morgan hacked the Bitfinex exchange in 2016 and stole 120,000 Bitcoin (BTC), worth about $8.2 billion at current market prices. The two were later arrested by U.S. authorities in 2022.
Law enforcement officials also seized stolen cryptocurrency assets, the largest seizure of digital assets ever made by the U.S. Department of Justice at the time.
The couple pleaded guilty to money laundering and conspiracy to defraud the U.S. government in a plea agreement with prosecutors in July 2023 and received light sentences. Lichtenstein initially admitted to money laundering, but later revealed that he was also a hacker.
In papers filed Oct. 9, U.S. prosecutors argued that Morgan should receive a lighter sentence of 18 months in prison for cooperating with law enforcement. She was also considered a “low-level” participant in the scheme and did not use much of the stolen funds.
Using this same rationale, prosecutors sentenced Lichtenstein to five years in prison for his role in orchestrating the hack and stealing 120,000 BTC. This five-year recommendation is a significantly reduced sentence from the 20 years in prison originally sought by the prosecution.
In documents submitted to the court on October 15, prosecutors pointed to Liechtenstein’s cooperation with investigators and lack of criminal record as reasons for the reduced sentence.
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