A hacker has been sentenced to five years in prison for his role in one of the largest cryptocurrency thefts ever committed, the infamous Bitfinex hack of 2016. Ilya Lichtenstein, 37, and his wife, Heather Morgan, who performed under the moniker Razzlekhan, were involved in laundering nearly 120,000 bitcoins stolen from the Hong Kong-based cryptocurrency exchange. At the time of the hack, the stolen bitcoins were valued at around $71 million, but due to the skyrocketing value of Bitcoin over the years, by the time they were captured, the amount had ballooned to over $4.5 billion—and today it’s valued at more than double.
The US Department of Justice stated Lichtenstein utilized sophisticated hacking techniques to breach Bitfinex’s systems, fraudulently authorizing more than 2,000 transactions. He began laundering the funds shortly after the theft, employing complex methods to mask the origins of the cryptocurrency. The couple was arrested in February 2022 after authorities intercepted their extensive laundering efforts.
District Judge Colleen Kollar-Kotelly, during the sentencing on November 14, remarked on the unprecedented scale of the crime. "This is so massive, it is not comparable to other crypto crimes," Judge Kollar-Kotelly noted, citing the complexity and duration of the scheme as reasons for its severity. Although Lichtenstein faced more severe penalties, prosecutors recommended the five-year sentence due to his cooperation with law enforcement and contributions to investigations involving cybercrime.
The extent of the laundering operation was described as sophisticated. Lichtenstein and his wife used fictitious identities, diversified transactions across multiple accounts, and even purchased gold coins and gift cards to obscure the stolen funds. According to prosecutors, only about 21 percent of the stolen crypto was successfully laundered—roughly $14 million at the time of the theft, scaling up to over $1 billion at the time of their arrest.
Heather Morgan, who also entered a guilty plea for her role, is scheduled for sentencing on November 18. Prosecutors have recommended 18 months for her, arguing her level of involvement was lesser compared to Lichtenstein's orchestration of the hack and laundering.
Following the hack, Lichtenstein initially concealed the criminal operation from Morgan, only disclosing the details years later. Yet, once she was brought up to speed, she became actively engaged, joining him on multiple trips abroad to meet couriers who brought cash back to the U.S. during vacations to places like Kazakhstan and Ukraine.
Before the court, Lichtenstein expressed deep remorse, indicating he wished he had used his technical capabilities for positive engagement rather than crime. He stated, "I want to take full responsibility for my actions and make amends any way I can." He has expressed plans to use his skills to help combat cybercrime following his release.
Before the chaos of the hack and subsequent laundering, Lichtenstein had experience working within the legitimate tech industry and had even co-founded and successfully ran a digital marketing agency and later, software company.
Authorities recovering the stolen funds was significant; so far, they’ve reclaimed about 96 percent of what was taken, largely credited to Lichtenstein's cooperation after his arrest. His attorney, Samson Enzer, elaborated on Lichtenstein’s role as providing insights invaluable to various investigative pursuits. They maintained, "The vast bulk of the stolen money was never spent," emphasizing the organized and methodical nature of their efforts to conceal their criminal activities.
bitfinex, the platform impacted by the hack, suffered significantly, with the stolen assets amounting to about 36 percent of the company’s total assets at the time. Bitfinex's lawyer described the breach as devastating—requiring swift and severe corrective measures to manage the fallout.
While Lichtenstein’s hacking past included some encounters with the law, his story epitomizes the complicated relationship between technology and crime. Having experimented with hacking and financial fraud since his teenage years, he eventually emerged as both seemingly talented and tragically misguided. Observers hope Lichtenstein’s experiences may lead to his redemption and transformation post-release.
