Lichtenstein Morgan Press Release

FOR IMMEDIATE RELEASE CRM
February 8, 2022 202-514-2007

www.justice.gov TTY 866-544-5309
Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen

Cryptocurrency
Government Seized $3.6 Billion in Stolen Cryptocurrency Directly Linked to
2016 Hack of Virtual Currency Exchange
WASHINGTON – Two individuals were arrested this morning in Manhattan for an alleged
conspiracy to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, a virtual
currency exchange, presently valued at approximately $4.5 billion. Thus far, law enforcement has
seized over $3.6 billion in cryptocurrency linked to that hack.
“Today’s arrests, and the Department’s largest financial seizure ever, show that cryptocurrency is
not a safe haven for criminals,” said Deputy Attorney General Lisa O. Monaco. “In a futile effort to
maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of
cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department
once again showed how it can and will follow the money, no matter the form it takes.”
“Today, federal law enforcement demonstrates once again that we can follow money through the
blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a
zone of lawlessness within our financial system,” said Assistant Attorney General Kenneth A. Polite
Jr. of the Justice Department’s Criminal Division. “The arrests today show that we will take a firm
stand against those who allegedly try to use virtual currencies for criminal purposes.”
Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, both of New York, New York, are scheduled
to make their initial appearances in federal court today at 3:00 p.m. in Manhattan.
According to court documents, Lichtenstein and Morgan allegedly conspired to launder the proceeds
of 119,754 bitcoin that were stolen from Bitfinex’s platform after a hacker breached Bitfinex’s
systems and initiated more than 2,000 unauthorized transactions. Those unauthorized transactions
sent the stolen bitcoin to a digital wallet under Lichtenstein’s control. Over the last five years,
approximately 25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a
complicated money laundering process that ended with some of the stolen funds being deposited
into financial accounts controlled by Lichtenstein and Morgan. The remainder of the stolen funds,
comprising more than 94,000 bitcoin, remained in the wallet used to receive and store the illegal
proceeds from the hack. After the execution of court-authorized search warrants of online accounts
controlled by Lichtenstein and Morgan, special agents obtained access to files within an online
account controlled by Lichtenstein. Those files contained the private keys required to access the
digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to
lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex. The
recovered bitcoin was valued at over $3.6 billion at the time of seizure.
“Cryptocurrency and the virtual currency exchanges trading in it comprise an expanding part of the
U.S. financial system. But digital currency heists executed through complex money laundering
schemes could undermine confidence in cryptocurrency,” said U.S. Attorney Matthew M. Graves
for the District of Columbia. “The Department of Justice and our Office stand ready to confront these
threats by using 21st century investigative techniques to recover the stolen funds and to hold the
perpetrators accountable.”
The criminal complaint alleges that Lichtenstein and Morgan employed numerous sophisticated
laundering techniques, including using fictitious identities to set up online accounts; utilizing
computer programs to automate transactions, a laundering technique that allows for many
transactions to take place in a short period of time; depositing the stolen funds into accounts at a
variety of virtual currency exchanges and darknet markets and then withdrawing the funds, which
obfuscates the trail of the transaction history by breaking up the fund flow; converting bitcoin to
other forms of virtual currency, including anonymity-enhanced virtual currency (AEC), in a practice
known as “chain hopping”; and using U.S.-based business accounts to legitimize their banking
activity.
“In a methodical and calculated scheme, the defendants allegedly laundered and disguised their vast
fortune,” said Chief Jim Lee of IRS-Criminal Investigation (IRS-CI). “IRS-CI Cyber Crimes Unit
special agents have once again unraveled a sophisticated laundering technique, enabling them to
trace, access and seize the stolen funds, which has amounted to the largest cryptocurrency seizure to
date, valued at more than $3.6 billion.”
“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow
the digital trail, wherever it may lead,” said FBI Deputy Director Paul M. Abbate. “Thanks to the
persistent and dedicated work of our FBI Investigative teams and law enforcement partners, we're
able to uncover the source of even the most sophisticated schemes and bring justice to those who try
to exploit the security of our financial infrastructure.”
“Financial crime strikes at the core of our national and economic security. With a hack of this
magnitude, public and private sector collaboration is crucial to ensure continued consumer
confidence in our financial system,” said Acting Executive Associate Director Steve Francis of
Homeland Security Investigations (HSI). “Ilya Lichtenstein and his wife Heather Morgan attempted
to subvert legitimate commerce for their own nefarious purposes, operating with perceived
anonymity. Today’s action demonstrates HSI’s commitment and ability to work with a collation of
the willing to unravel these technical fraud schemes and identify the perpetrators, regardless of where
they operate.”
Lichtenstein and Morgan are charged with conspiracy to commit money laundering, which carries a
maximum sentence of 20 years in prison, and conspiracy to defraud the United States, which carries
a maximum sentence of five years in prison. A federal district court judge will determine any
sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The investigation was led by IRS-CI Washington, D.C. Field Office’s Cyber Crimes Unit, the FBI’s
Chicago Field Office, and HSI-New York. The Ansbach Police Department in Germany provided
assistance during this investigation.
The case is being prosecuted by Trial Attorneys Jessica Peck and C. Alden Pelker of the Justice
Department’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney
Christopher B. Brown of the U.S. Attorney’s Office for the District of Columbia. Paralegal
Specialists Angela De Falco and Brian Rickers and Legal Assistant Jessica McCormick provided
valuable assistance. Significant assistance was also provided by Trial Attorney Christen Gallagher
of the Office of International Affairs, the U.S. Attorneys’ Offices for the Eastern District of
Pennsylvania and Southern District of New York, HSI-Philadelphia, and former Assistant U.S.
Attorney Jessica C. Brooks.
A complaint is merely an allegation, and all defendants are presumed innocent until proven guilty
beyond a reasonable doubt in a court of law.
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FOR IMMEDIATE RELEASE CRM

February 8, 2022 202-514-2007

Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen

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