WASHINGTON (AP) — The Justice Department announced Tuesday its largest-ever financial seizure — more than $3.5 billion — and the arrests of a New York couple accused of conspiring to launder billions of dollars in cryptocurrency stolen from the 2016 hack of a virtual currency exchange.
Federal law enforcement officials said they recovered roughly $3.6 billon in cryptocurrency linked to the hack of Bitfinex, a virtual currency exchange whose systems were breached nearly six years ago.
Ilya “Dutch” Lichtenstein, a citizen of Russia and the United States, and his wife, Heather Morgan, were arrested in Manhattan on Tuesday morning, accused of relying on various sophisticated techniques to launder the stolen money and conceal the transactions. They face federal charges of conspiracy to commit money laundering and conspiracy to defraud the United States. It was unclear if they had lawyers or people who could speak on their behalf.
They were in custody pending an appearance in Manhattan’s federal court later Tuesday.
“The message to criminals is clear: cryptocurrency is not a safe haven. We can and we will follow the money, no matter what form it takes,” Deputy Attorney General Lisa Monaco said in a video statement released by the Justice Department.
The couple was not charged in the Bitfinex hack, which resulted in the theft of almost than 120,000 bitcoin — at the time valued at nearly $71 million and is now worth more than $4.5 billion, officials said.
Investigators using what Monaco described as “old-fashioned police work” traced the stolen funds to more than a dozen accounts that officials say were controlled by Lichtenstein, Morgan and their businesses. They relied on accounts at a dark web criminal marketplace called AlphaBay, which was dismantled by the Justice Department in 2017, as a “pass-through” for the stolen bitcoin, according to documents. And they relied, investigators say, on classic money laundering techniques to hide their activities and the movement of the money, such as setting up accounts with fictitious identities
Millions of dollars of the transactions were cashed out through bitcoin ATMs and used to purchase gold and non-fungible tokens as well as more mundane items like Walmart gift cards for personal expenses, prosecutors said.
Justice Department officials say that though the proliferation of cryptocurrency and virtual currency exchanges represent innovation, the trend has also been accompanied by money laundering, ransomware and other crimes. The Justice Department last year announced the formation of the National Cryptocurrency Enforcement Team in recognition of the trend.
“Today’s arrests, and the Department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” Monaco said in a statement. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter the form it takes.”
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