A New York couple has been arrested and charged with conspiring to launder $4.5 billion in stolen cryptocurrency funds. Law enforcement officials have seized $3.6 billion of those funds
Bitfinex Hack History
In August, 2016 crypto exchange Bitfinex was hacked. 120k Bitcoin were stolen, worth about $72 million at the time. 2,000 transactions were approved from users’ accounts, sending the Bitcoin to one wallet.
Tracking Down the Funds
In early 2017, small amounts of money began to exit the wallet through Alphabay, a currency exchange on the dark web that was often used to transact deals for drugs, weapons, and other illicit goods.
When Alphabay was shut down by law enforcement in 2017, the perpetrators switched to routing the money through the Russian-language marketplace Hydra. Three years later, as Bitcoin prices spiked, the launderers employed a type of transaction known as a “coinjoin,” using Wasabi Wallet, a privacy wallet designed to prevent blockchain tracing. These methods amounted to the most “state-of-the-art laundering techniques” at the time
The Justice Department’s efforts were aided tremendously by the fact that AlphaBay had been shut down in 2017 by an international law enforcement effort led by the FBI. This shutdown, Robinson believes, gave law enforcement access to the service’s internal transaction logs, which helped officials concretely connect the dots between the wallet linked to the 2016 hack and the laundered accounts. “The fact that law enforcement took down AlphaBay probably led to [Lichtenstein and Morgan’s] downfall,” Robinson says.
Private Keys Stored On Cloud Storage
In January, they obtained a search warrant for a cloud storage account belonging to Lichtenstein, where they found a list of wallet addresses linked to the hack with their passwords. One of those wallets stored the majority of the remaining money: 94,000 Bitcoin, documents alleged. Using Lichtenstein’s passwords in the cloud, they entered the account and seized the funds, investigators said.
Funds Being Returned to Owners?
U.S. officials said that while a judge would ultimately decide how the recovered money would be distributed, the government would seek to return funds to their original owners.
Blockchain infrastructure company Meter said $4.4 million was stolen during a cyberattack on the platform