What does a super hacker look like? A nerd? What about an eccentric female rap star artist? Or maybe just a crypto investor. Or a contributing author to a major magazine! In this article, I will write about the Bitfinex cryptocurrency exchange hack that occurred in 2016. Over a hundred thousand Bitcoins were hacked, whose value is now over four billion dollars! The hackers have been traced, and the money has now been seized after six years!
The story began six years ago, in the August of 2016 when an unknown hacker managed to gain access to the Bitfinex exchange and authorized around 2000 unapproved transactions. For the people who don't know, Bitfinex is relatively a popular cryptocurrency exchange in the crypto space. However, their popularity took a tremendous hit as a result of this hack. It's safe to say, they never really recovered the trust of their clients from that point onwards.
The hack made big news at that time, resulting in the price of Bitcoin tumbling down as many other users began to sell their BTC as they lost hope and were scared to keep their coins in exchanges. Despite Bitfinex putting a bounty on the stolen Bitcoin, not much happened in the way of recovery. Even though no one had actually lost sight of the Bitcoin on the blockchain, nobody really knew the account holders, nor did they have the private keys needed to access the loots. So, people were just observing the movement of Bitcoin that had been transferred to various wallets. This is because the underlying technology of blockchain acts as an immutable ledger, forever storing transactions in its database in a transparent manner, making it readily traceable.
Some of the funds were withdrawn, but the majority of the nest eggs stayed put secured until today when the Department of Justice announced that they had recovered the funds. 3.6 Billions dollar of hacked BTC! It's a win for the good guys who suffered a lot because of hacks!
The Department of Justice stated that hackers used numerous sophisticated laundering techniques. That includes using fake identities to set up online accounts and running computer programs to automate transactions to transfer about 25,000 stolen coins out of the wallet and into financial accounts jointly controlled by the thieving couple since the time of the theft. They relied on accounts at a dark web criminal marketplace called Alphabay, which the US Justice Department dismantled by 2017.
However, The DOJ tracing exchange accounts to India-based emails managed to connect the stolen funds to the business and personal accounts of two people Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31.
The DOJ special agents obtained court-authorized search warrants to go through the couple's online accounts and were able to find files containing the private keys required to access a digital wallet containing 94,000 Bitcoins representing the billions in stolen funds!
After this the DOJ apprehended the hackers in their Manhattan apartment. Safe to say, this is one Tuesday morning that the hackers will never forget!
In a statement, Deputy Attorney General Lisa Monaco said the recovered funds marked the DOJ's largest financial seizure ever and called the case proof that cryptocurrency isn't a safe heaven for criminals.
Surprisingly you would never expect that a couple who were good at their fields hacked this much money! Odd right? It was unfortunate for them that Clark Kent Superman-style of hiding in plain sight didn't work for them at all! The male counterpart is Ilya Lichtenstein, a dual citizen of Russia and the United States. He is also publicly known as a co-founder of Mixrank - a startup that helps companies analyze marketing data of customers and competitors. A simple Google search will give you all the information about him.
His wife and co-conspirator is a 31-year-old woman Heather Morgan. She is a self-acclaimed economist and journalist. Her resume includes articles and pieces written for ink and Forbes. She is also a serial entrepreneur and a relatively well-known angel investor! Perhaps the most exciting part of this lady's resume is her alter ego, which manifests itself in her rap music. Here she is called Razzle Khan. If you're brave enough, you can easily look up her rap videos online. However, I am not liable for the medical expenses that may occur when you have to gouge your eye out! It's really that bad; I am not even kidding!
According to the prosecutors, the couple cashed out Millions of Dollars worth of transactions through Bitcoin ATMs and used the funds to purchase Gold and non-fungible tokens. Despite being billionaires on paper, they were unable to liquidate the vast majority of their stolen funds due to complications that would have come with the transactions process. This is one fact that we should be grateful for now.
So the main question that pops out in everyone's mind that what comes next! For the couples, things are about to become very different from the comfortable upscale lifestyle that they were enjoying by spending Millions from people's money. The two have been charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison. In addition, they have been slammed with a second charge which is a conspiracy to defraud the United States, that carries a maximum sentence of five years.
So, all in all, the next 25 years might be looking very unpleasant for couples. The CEO of Bitfinex already tweeted thanking the DOJ. He made posts explaining that upon receiving funds, the exchange will undergo a pervasive process of paying back the holders who were hurt when the funds were stolen from the exchange. There's not much information on how they will refund, but I hope this will happen soon as this is now an open and shut case.
This is a clear-cut reminder for the people who are thinking of hacking in the future, whether centralized or decentralized; no matter how many years, you'll be caught and punished for your sin. Because you'll make mistakes, and you can't remove that from blockchain!
Read Also - Binance Smart Chain - A Wild West!
Important Sources
- CNBC - https://www.cnbc.com/2022/02/08/feds-seize-3point6-billion-stolen-from-bitfinex-hack.html
- The United States Department of Justice - https://www.justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency