A US computer expert who stole bitcoin worth billions of dollars at current prices and then spent years laundering some of the hacked cryptocurrency with help from his wife has been sentenced to five years in prison.
Ilya Lichtenstein masterminded one of the largest-ever thefts from a virtual currency exchange before he and his wife, Heather Rhiannon Morgan, carried out an elaborate scheme to liquidate the stolen funds, according to prosecutors.
US District Judge Colleen Kollar-Kotelly told Lichtenstein that his theft was “meticulously planned” and not an impulsive act.
Lichtenstein, who gets credit for the two years and nine months that he has spent in jail since his February 2022 arrest, expressed remorse for “wasting my talents on crime instead of a positive contribution to society”.
He said he hopes that he can apply his expertise to fight cybercrime when he gets out of prison.
“I want to take full responsibility for my actions and make amends any way I can,” he said.
The judge is scheduled to sentence Morgan on Monday. Lichtenstein pleaded with the judge to spare his wife from prison, blaming himself for her involvement.
In August 2016, Lichtenstein hacked into a virtual currency exchange, Hong Kong-based Bitfinex, and stole approximately 120,000 bitcoin.
It was worth approximately 71 million dollars (£56 million) at the time of the hack and would be valued at more than 7.6 billion dollars (£5.9 billion) at current market prices, according to prosecutors.
Several months later, Lichtenstein began moving the stolen bitcoin in a string of complex transactions designed to conceal its path across a series of accounts and platforms. He enlisted his wife’s help in cleaning the stolen funds.
Lichtenstein, an entrepreneur and cryptocurrency investor, is a US citizen who was born in Russia and grew up in a Chicago suburb.
Morgan, a business owner and writer, adopted the alter ego “Razzlekhan” for performing rap songs and recording videos for her music.
Prosecutors recommended a five-year prison sentence for Lichtenstein, who pleaded guilty in August 2023 to one count of money laundering conspiracy.
They recommended an 18-month prison sentence for Morgan, who pleaded guilty to the same charge.
“Neither the hack nor the laundering scheme was an impulsive decision. The defendant (Lichtenstein) spent months attempting to gain access to Bitfinex’s infrastructure and get the accesses and permissions he needed in order to orchestrate his hack,” prosecutors wrote.
Lichtenstein told his wife about the hack over three years later, but he initially solicited her help in laundering the proceeds “without explaining exactly what he was doing”, according to prosecutors.
Morgan “was certainly a willing participant and bears full responsibility for her actions, but she was a lower-level participant”, prosecutors wrote.
During family trips to Kazakhstan and Ukraine, Lichtenstein met with couriers who delivered him money that he smuggled back into the US.
Bitcoin is the largest and oldest cryptocurrency, which is digital money that typically is not backed by any government or banking institution.
Transactions get recorded with technology called a blockchain.
The couple successfully laundered about 21% of the funds stolen from Bitfinex.
The laundered money was worth at least 14 million dollars at 2016 prices. Its value would have exceeded one billion dollars at the time of their 2022 arrest.
Authorities seized the remaining funds, collectively valued at over six billion dollars at current prices.
“He became one of the greatest money launderers that the government has encountered in the cryptocurrency space,” prosecutors wrote.
An attorney for Bitfinex said the hack “devastated” its finances and its reputation with its customers, with the stolen funds accounting for approximately 36% of the company’s assets at the time of theft.
Over 96% of the stolen funds have been recovered with help from Lichtenstein, according to defence lawyer Samson Enzer.
The “vast bulk” of the stolen money was never spent, the lawyer said.
“This is not an evil person,” Mr Enzer said. “This is a good person who made some very bad mistakes.”
