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Home»TRADING NEWS»Bitfinex hacker turns government witness and explains tactics used in 2016 theft.
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Bitfinex hacker turns government witness and explains tactics used in 2016 theft.

By Crypto FlexsFebruary 28, 20242 Mins Read
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Bitfinex hacker turns government witness and explains tactics used in 2016 theft.
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At his recent trial in Washington, Ilya Lichtenstein revealed how he carried out the monumental Bitcoin theft from cryptocurrency exchange Bitfinex in 2016.

As a cooperating witness for the U.S. government in a money laundering case, Lichtenstein admitted to infiltrating Bitfinex’s security systems over an extended period of time. His criminal activities went beyond Bitfinex to compromise accounts on other major cryptocurrency platforms, including Coinbase and Kraken.

Liechtenstein highlighted the use of Bitcoin Fog, a cryptocurrency mixing service that U.S. prosecutors say was involved in facilitating the laundering of significant amounts of money from darknet marketplaces linked to the sale of illegal drugs. Lichtenstein’s motivation for deciding to target Bitfinex in 2016 reportedly had to do with the challenges he faced while launching a tech startup in San Francisco.

Liechtenstein and his wife | Source: New York Post

A former hacker described to jurors how he captured customer passwords at Bitfinex, which he exploited to gain unauthorized access to accounts at other exchanges. Liechtenstein utilized several blending services to disguise the source of the stolen funds, but made clear that these blenders were not used for most of the laundering process. Instead, he admitted to depositing funds into various cryptocurrency exchanges using identities purchased on the darknet.

Lichtenstein previously pleaded guilty with his wife, Heather Morgan, to participating in a conspiracy to launder money obtained through hacking.

In an appeal last year, U.S. prosecutors alleged that Lichtenstein and his wife used fake IDs to open online accounts and constantly deposited and withdrawn money on various exchanges and dark web markets, hiding digital traces of the stolen funds. Some of the stolen funds were also used to purchase NFTs and gold.

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