By: Charles Gianelloni, Las Vegas Partner and Eddie Curry, Las Vegas Diversity Writing Intern (Curry is not admitted to practice law)
On February 8, 2022, two individuals were arrested for conspiracy to launder cryptocurrency stolen during the 2016 hack of Bitfinex, a Hong Kong-based virtual currency exchange. According to court documents, Ilya Lichtenstein, 34, and his wife Heather Morgan, 31, conspired to launder the proceeds of 119,754 bitcoin stolen from Bitfinex’s platform in 2016. The bitcoins were worth approximately $72 million when hackers stole them. Lichtenstein and Heather then transferred approximately 25,000 of the stolen bitcoins from their digital wallet into accounts they controlled. Due to the rise in the price of bitcoin since 2016, the remaining 95,000 bitcoins recovered in the duo’s digital wallet are now valued at over $4.275 billion.
Lichtenstein and Morgan are charged with conspiracy to commit money laundering, which carries a maximum sentence of twenty years in prison, and conspiracy to defraud the United States, which carries a maximum sentence of five years in prison. “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.” Paul M. Abbate, Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen Cryptocurrency, Department of Justice (February 8, 2022).
Digital currency is a new and exciting space. As is the case with most emerging technologies, regulation has trailed innovation. As a result, the space attracts as many bad actors as it does innovators. If you believe you have been a victim of a fraudulent scheme in the digital currency area, consider consulting with legal counsel.