Major bitcoin hacker Lichtenstein gets five years in prison for crypto laundering scheme

A man whose 2016 hack of Bitfinex drained nearly 120,000 bitcoin from that cryptocurrency exchange was sentenced Thursday to five years in prison for a money laundering scheme he and his wife employed to hide the swiped crypto.

The value of that bitcoin stolen by Ilya Lichtenstein was just $70 million when he executed the cyberattack on Bitfinex and initiated more than 2,000 unauthorized transactions to siphon off the cryptocurrency.

That crypto is currently worth $10.5 billion due to bitcoin’s rise in price since 2016.

“I want to take full responsibility for my actions and make amends any way I can,” Lichtenstein reportedly told Judge Colleen Kollar-Kotelly in U.S. District Court in Washington, D.C., before she sentenced him to the prison term and three years of supervised release that prosecutors had requested.

Lichtenstein, 35, and his wife, Heather Rhiannon Morgan, pleaded guilty to money laundering conspiracy in August 2023, 18 months after their arrest in New York City, where they lived.

Lichtenstein first publicly admitted that he had been the hacker of Bitfinex at that plea hearing.

He had faced a maximum possible sentence of 20 years in prison before his sentencing on Thursday.

“The defendant perpetrated what was at the time one of the largest thefts from a virtual currency exchange,” prosecutors wrote in a sentencing memorandum. “He became one of the greatest money launderers that the government has encountered in the cryptocurrency space.”

“Over half a decade, the defendant engaged in what IRS agents described as the most complicated money laundering techniques they had seen to date,” prosecutors wrote.

Lichtenstein will get credit for the 29 months he has served in custody since his arrest. And with credit for good behavior, which is standard in the federal penal system, Lichtenstein could be released from prison in less than two years.

Morgan is scheduled to be sentenced Monday in Washington.

Prosecutors, who have said she was a “lower-level participant” in the money-laundering scheme, which she only became involved in three years after the Bitfinex hack, are asking the judge to sentence Morgan to 18 months in prison.

At the time of the couple’s arrest in February 2022, the Department of Justice said officials had been able to seize more than 94,000 bitcoin stolen in the hack. That crypto, which was worth more than $3.6 billion at the time of the arrest, is now worth nearly $8.3 billion.

Prosecutors in their sentencing memo for Lichtenstein wrote that the federal “government anticipates returning most if not all of those assets to Bitfinex and/or other potential owners through restitution” and other means.