By ERIC TUCKER Associated Press
WASHINGTON (AP) — The Justice Department on Tuesday announced its largest financial seizure — more than $3.5 billion — and the arrest of a New York couple accused of conspiring to launder billions of dollars. in cryptocurrency stolen in the 2016 hack of a virtual currency exchange.
Federal law enforcement officials said they have recovered approximately $3.6 billion in cryptocurrency linked to the hack of Bitfinex, a virtual currency exchange whose systems were hacked 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 using various sophisticated techniques to launder stolen money and conceal the transactions. They face federal charges of conspiracy to launder money 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 awaiting an appearance in Manhattan federal court later Tuesday.
“The message to criminals is clear: Cryptocurrency is not a safe haven. We can and will track the money in any form,” Deputy Attorney General Lisa Monaco said in a video statement released. by the Department of Justice.
The couple have not been charged in the Bitfinex hack, which resulted in the theft of almost 120,000 bitcoins – at the time valued at almost $71 million and now worth more than $4.5 billion, have officials said.
Investigators using what Monaco described as “old-fashioned police work” traced the stolen funds to more than a dozen accounts that officials said were controlled by Lichtenstein, Morgan and their companies. According to documents, they relied on accounts on a dark web criminal marketplace called AlphaBay, which was taken down by the Justice Department in 2017, as a “go-anywhere” for stolen bitcoin. And they relied, investigators say, on classic money laundering techniques to conceal their activities and the movement of money, such as creating accounts with fictitious identities.
Millions of dollars in transactions were cashed out through bitcoin ATMs and used to buy gold and non-fungible tokens as well as more mundane items like Walmart gift cards for personal spending, prosecutors said.
Justice Department officials say that while the proliferation of cryptocurrencies and virtual currency exchanges represents innovation, the trend has also been accompanied by money laundering, ransomware and other crimes. Last year, the Department of Justice announced the formation of the National Cryptocurrency Enforcement Team in recognition of the trend.
“Today’s arrests and the Department’s largest ever financial seizure 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 maze of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department has once again shown how it can and will follow the money, no matter what form it takes.
Follow Eric Tucker on Twitter at http://www.twitter.com/etuckerAP.
By ERIC TUCKER Associated Press