Couple arrested for stealing millions of dollars in cryptocurrencies

By Ken DilanianNBC

The United States Department of Justice announced Tuesday that it has seized more than $3.6 billion in cryptocurrency and arrested two people in connection with the 2016 hack of a virtual currency exchange.

It is the largest financial seizure ever made by the Justice Department, authorities said.

“We will not allow cryptocurrencies to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said Assistant Attorney General Kenneth A. Cortes Jr. of the Justice Department's Criminal Division.

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Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, were arrested in Manhattan on Tuesday.

They were scheduled to make their first appearance in federal court in Manhattan at 3:00 pm.

According to court documents, Lichtenstein and Morgan conspired to launder the value of 119,754 bitcoins that were stolen from a platform called Bitfinex after a hacker breached Bitfinex's systems and made more than 2,000 unauthorized transactions.

The stolen bitcoins were sent to a digital wallet under Lichtenstein's control, prosecutors said.

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Prosecutors added that around 25,000 of the stolen bitcoins were transferred from Lichtenstein's wallet through a series of laundering transactions that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan.

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The rest of the stolen funds, more than 94,000 bitcoins, remained in the wallet used to receive and store the illegal proceeds of the hack, the Justice Department said.

On Tuesday, the price of a bitcoin hovered around $43,400.

The recovered bitcoins were valued at more than $3.6 billion at the time of the seizure.

At the time they were stolen, they were worth 71 million.

Investigators searched online accounts controlled by Lichtenstein and Morgan to obtain the private keys that allowed special agents to legally seize and recover more than 94,000 bitcoins that had been stolen from Bitfinex.

A technician inspects the rear of bitcoin mining at Bitfarms in Saint Hyacinthe, Quebec, on March 19, 2018. Lars Hagberg/AFP via Getty Images

“Cryptocurrency and the virtual currency exchanges that trade on it comprise an expanding part of the US financial system.

But digital currency thefts executed through complex money laundering schemes could undermine confidence in cryptocurrency,” said US Attorney Matthew M. Graves of the District of Columbia.

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"The Department of Justice and our office stand ready to confront these threats by using 21st century investigative techniques to recover stolen funds and hold perpetrators accountable."

The criminal complaint alleges that Lichtenstein and Morgan used sophisticated laundering techniques to try to distribute the bitcoins out of sight of the government.

But it does not work.

“Criminals always leave footprints, and today's case is a reminder that the FBI has the tools to follow the digital trail, wherever it leads,” said FBI Deputy Director Paul M. Abbate.

In a statement, Bitfinex said: “We are pleased that the US Department of Justice announced today that it has recovered a significant portion of the bitcoins stolen during the August 2016 security breach. We have been cooperating extensively with the Department of Justice. since you began your investigation and we will continue to do so.