Bitfinex hacked money laundering case: Couple pleads guilty! Affected users awaiting compensation for 7 years nearing payout date

According to a report by Cointelegraph, a couple involved in the 2016 Bitfinex hack has agreed to plead guilty to charges of money laundering and conspiracy to commit fraud with U.S. authorities. The couple allegedly used thousands of wallets and frequent transactions to obfuscate their activities. The authorities arrested the couple in February last year and seized over 94,000 bitcoins worth approximately $3.6 billion.

Using Thousands of Wallets, Frequent Trades to Confuse Observers

According to sources, a married couple is suspected of laundering and conspiring to defraud billions of dollars' worth of Bitcoin, with the crime being linked to the 2016 hack of the cryptocurrency exchange Bitfinex. They have now agreed to plead guilty to the U.S. authorities.

Prosecutors have not yet provided evidence that the defendants, Ilya Lichtenstein and his wife Heather Morgan, hacked into Bitfinex, and the true identity of the hackers remains unconfirmed. However, the couple did receive stolen funds and proceeded to launder them through a series of small and frequent transactions across multiple accounts and platforms including CEX, DEX, and the dark web.

The two were arrested in February last year, with authorities initially seizing only $54 million in value, but now the total has reached over $3.6 billion in more than 94,000 bitcoins and other cryptocurrencies, with part of it expected to be returned to Bitfinex for user compensation.

As part of the plea agreement, the couple will appear in court for trial on August 3.

Theft of 120,000 Bitcoins from Bitfinex: The Story

This shocking cryptocurrency crime occurred in August 2016 when Bitfinex, a popular exchange at the time, suddenly announced a devastating breach, claiming that hackers exploited a security vulnerability to steal nearly 120,000 bitcoins, resulting in a loss of $54 million, making it one of the largest hacking attacks in cryptocurrency history.

According to Coingecko data, the price of Bitcoin plummeted 20% at the time to as low as $517 per coin.

Bitfinex's Response

To prevent closure and make repayment more manageable, Bitfinex spread the losses between the company and its users, with a general loss of 36%. Users were able to claim $BFX tokens proportionate to their losses, serving as redemption vouchers for iFinex shares or converting back to dollars. Fortunately, the tokens were redeemed within 8 months, bringing a partial conclusion to the incident.

Intensive Investigation by Authorities

The hackers exploited system vulnerabilities to execute over 2,000 unauthorized transactions, sending bitcoins to numerous criminal wallets and laundering funds through various channels to obfuscate the money trail.

Investigators told TIME that small amounts of funds from monitored wallets began interacting with the dark web and Russian exchanges in 2017. They attempted to obfuscate their on-chain records using the advanced "privacy wallet Wasabi Wallet."

However, investigators dedicated to utilizing various tracking techniques matched the defendants' closely related shell accounts within a vast database and discovered traces of related wallet transfers entering traditional banks.

By tracing their real-world transactions, the couple was arrested for gradually cashing out over 20,000 bitcoins from monitored wallets.