At a recent trial in Washington, Ilya Lichtenstein revealed how he carried out the monumental theft of bitcoin from cryptocurrency exchange Bitfinex in 2016.
As a cooperating witness for the US government in a money laundering case, Lichtenstein admitted to infiltrating Bitfinex's security systems over an extended period. His criminal activities extended beyond Bitfinex, as he compromised accounts at other leading cryptocurrency platforms, including Coinbase and Kraken.
Lichtenstein highlighted his use of bitcoin Fog, a cryptocurrency mixing service implicated by US prosecutors in facilitating the laundering of substantial sums from darknet markets involved in illegal narcotics sales. The reason behind Lichtenstein's decision to target Bitfinex in 2016 was reportedly related to the challenges he faced with his San Francisco tech startup.
The former hacker explained to the jury his methodology for capturing customer passwords at Bitfinex, which he then exploited to gain unauthorized access to accounts at other exchanges. Although Lichtenstein used various mixing services to disguise the origins of the stolen funds, he clarified that these mixers were not used for the majority of the laundering process. Instead, he admitted to depositing funds on several cryptocurrency exchanges using identities purchased on the dark web.
Lichtenstein, along with his wife, Heather Morgan, previously pleaded guilty to their role in a conspiracy to launder money stemming from the hack.
During the guilty plea hearing Last year, US prosecutors claimed that Lichtenstein and his wife used fake IDs to set up online accounts and hide the digital footprint of their stolen funds by constantly depositing and withdrawing the money from different exchanges and dark web markets. Some of the stolen funds were even used to purchase NFTs and gold.
