US Gov Seizes $3.6B in Bitcoin From Notorious 2016 Bitfinex Exchange Hack
The U.S. Department of Justice (DoJ) has seized more than 94,000 Bitcoins that were allegedly stolen in the hack of crypto exchange Bitfinex in 2016.
According to a Feb 8 announcement by the DoJ, 34-year-old Ilya Lichtenstein, and his wife Heather Morgan, 31, both of New York were arrested for “alleged conspiracy to launder $4.5 billion in stolen cryptocurrency.”
The report noted that law enforcement has seized over $3.6 billion in cryptocurrency linked to that hack so far. The pair face up to 25 years in prison if convicted, and they are set to make an initial appearance in federal court in Manhattan on Feb 9.
Crypto Twitter is currently awash with video clips of Morgan dancing around on the social media platform TikTok, but many of the comments were too racy for republication here.
The couple used several laundering techniques including using fabricated identities, fake online accounts, automated transactions, “chain hopping” by converting to privacy-focused coins. On-chain analyst David Pull, delved into the wallet activity and movements of the digital loot concluding:
“This is just one example of how Bitcoin’s public ledger, open to all, allows for observants the see the history of the ledger unfolding live.”
The Bitfinex hack was one of the largest in crypto history with 119,754 BTC worth around $4.5 billion at current prices stolen at the time five years ago.
More Bitcoin for the Treasury?
Commentators on Twitter expressed concern over the amount of Bitcoin that the U.S. government now controls, however. Crypto critic “Mr. Whale,” told his 425,000 Twitter followers:
“The US government now controls one of the largest Bitcoin wallets in the world after the DOJ seized $3.6B $BTC today from the Bitfinex Hack. If they dumped it all, the price would collapse around -90% to well below $4.6K. Oof.”
BitcoinTreasuries, which tracks corporate and fund holdings of BTC, stated that it was adding the U.S. government to its listings with $4.5 billion worth of the asset. Authorities have yet to seize the full amount, however, but the current haul would be equivalent to more than double what Tesla holds.
It’s unclear exactly how much BTC the U.S. government holds but a selloff of even a fraction of it could send markets tumbling.
The U.S. government does not own that BTC, however, and it should rightfully be returned to Bitfinex which should rightfully return it to the victims of the hack. The exchange made a statement on Feb 8 to that effect:
“Bitfinex will work with the DOJ and follow appropriate legal processes to establish our rights to a return of the stolen Bitcoin,”
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