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Home»ADOPTION NEWS»U.S. prosecutors ask to reduce 2016 Bitfinex hacker Ilya Lichtenstein’s prison sentence to five years
ADOPTION NEWS

U.S. prosecutors ask to reduce 2016 Bitfinex hacker Ilya Lichtenstein’s prison sentence to five years

By Crypto FlexsOctober 16, 20244 Mins Read
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U.S. prosecutors ask to reduce 2016 Bitfinex hacker Ilya Lichtenstein’s prison sentence to five years
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U.S. prosecutors sentenced Ilya Lichtenstein to 60 months (five years) in prison and then requested three years of supervised release for money laundering related to the 2016 hack of cryptocurrency exchange Bitfinex.

The U.S. government is said to be requesting a lower sentence than the recommended guideline of 121 to 151 months, citing the defendant’s cooperation in this case and support for other investigations, despite his involvement in cybercrime activities prior to the Bitfinex hack. This is according to the sentencing memorandum filed Tuesday in the U.S. District Court for the District of Columbia. For example, Lichtenstein testified against the operators of cryptocurrency mixer Bitcoin Fog at trial earlier this year.

However, according to the filing, Lichtenstein served significantly more time in prison than his wife and co-conspirator Heather Morgan because he was primarily responsible for the Bitfinex hack. Last week, prosecutors sentenced rapper Morgan, also known as “Razzlekhan,” to 18 months in prison, citing his minor role in helping Lichtenstein launder money.

Nonetheless, prosecutors said a stronger sentence for Lichtenstein would help “break the cycle” of young cybercrime defendants who develop impressive technological expertise from an early age but feel socially isolated and seek out online communities. “They are exposed to criminal activity in online spaces, and that activity is normalized in a way that makes the impact on victims negligible,” prosecutors told a federal judge.

Bitfinex was the only victim of the 2016 hack

Lichtenstein and Morgan pleaded guilty. In August 2023, he was charged with money laundering conspiracy related to the 2016 Bitfinex security breach. The two allegedly conspired to launder $119,754. BTC

+1.20%
It was worth about $70 million in August 2016 and would now be worth about $8 billion, according to the government.

The two were arrested in 2022 and charged with conspiracy to launder money and conspiracy to defraud the United States. When the stolen funds were recovered, it marked the largest financial seizure ever by the U.S. Department of Justice.

A $72.6 million forfeiture judgment was agreed upon, but the value of seized assets is expected to exceed that amount, according to a filing Tuesday. Liechtenstein agreed to forfeit significant assets involved in the hack, including approximately 94,643 BTC and additional cryptocurrencies such as Bitcoin Cash, BSV, and Bitcoin Gold, in exchange for compensation in kind to Bitfinex. Morgan will also be held jointly liable for any restitution ordered.

Last week, the U.S. government said Bitfinex may have been the only victim of a 2016 hack involving the defendants.

After Bitfinex’s operations were reorganized due to post-hack solvency issues, parent company iFinex said customers could sell BFX tokens issued by the cryptocurrency exchange on the market or back to the platform for things like cash or iFinex shares.

“All customers holding BFX tokens have chosen to exercise one of these options, and as of April 3, 2017, all BFX tokens have been fully redeemed,” the company said.

However, the government asked the court “out of an abundance of caution” to allow Bitfinex account holders the opportunity to submit their claims ahead of sentencing.

Lichtenstein’s sentencing is scheduled for Nov. 14, and Morgan’s is scheduled for the following day.


Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.

© 2024 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.

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