On November 14, a U.S. court sentenced Ilya Lichtenstein to five years in prison for laundering funds stolen in the 2016 Bitfinex hack. Lichtenstein and his wife, Heather Morgan, were arrested in February 2022 in connection with the breach, during which 119,754 BTC were stolen. Authorities recovered 94,643 BTC from the couple, valued at approximately $3.6 billion at the time.

In August 2023, both Lichtenstein and Morgan pled guilty to money laundering, though Lichtenstein denied direct involvement in the hack itself. Initially facing up to 20 years in prison, Lichtenstein received a reduced sentence of five years plus three years of supervised release. Morgan’s sentencing is scheduled for November 18, with prosecutors recommending an 18-month prison term.

Flaws in Money Laundering Attempts

Investigators revealed that the couple managed to launder around 25,000 BTC (approximately $2.2 billion) using false identities, automated transaction software, and transfers through crypto exchanges and darknet marketplaces. However, cybersecurity expert Brett Johnson noted that Lichtenstein made several critical mistakes.

“He did everything wrong when it came to laundering,” Johnson stated.

Lichtenstein used multiple crypto accounts linked directly to his identity. Additionally, his name frequently surfaced during attempts to convert the stolen funds into fiat currency. Despite having theoretical knowledge, Johnson remarked that Lichtenstein was unprepared for real-world laundering operations.

“He understood the theory of laundering money but wasn’t prepared to execute it in practice,” Johnson added.

Restitution Efforts

Authorities confirmed in October that Bitfinex is the sole claimant for restitution from the hack. This case underscores the importance of recovering stolen funds and highlights the ongoing need to strengthen security measures in the cryptocurrency industry.