Ilya Lichtenstein, the man behind the looting of billions of dollars from Bitfinex, is now helping federal prosecutors build a case against bitcoin Fog, a cryptocurrency mixing service.
Lichtenstein pleaded guilty to money laundering charges last year after hacking into Bitfinex and getting away with $3.6 million worth of bitcoin.
Lichtenstein testifies at trial in Washington
crypto-heist-mastermind-ilya-lichtenstein-turned-us-cooperating-witness?leadSource=uverify%20wall” data-wpel-link=”external” target=”_blank”>According According to Bloomberg, Lichtenstein appeared this week at a trial in Washington, DC, where Roman Sterlingov was accused of operating a mixing service used by dark web criminals. The Bitfinex hacker was named as a cooperating witness for the US government on charges related to money laundering associated with the platform.
Lichtenstein told the jury that he used different mixers, including bitcoin Fog, to hide funds stolen from the Bitfinex hack. He stated that he used the service about ten times to launder funds. However, he mentioned that the platform was not his main method of money laundering as he later moved on to other services more suitable for his purpose, such as Helix.
U.S. authorities accused Sterlingov, a dual Russian-Swedish citizen, of operating the money-mixing service. Sterlingov is accused of receiving millions of dollars from dark web markets associated with illegal drug trafficking.
Tor Ekeland, Sterlingov's lawyer, maintains that there is no evidence, such as server logs and witness accounts, linking Lichtenstein to the platform. Ekeland further pressed Lichtenstein during the trial about whether he knew or communicated with the defendant, which he denied.
The attorney then asked about Lichtenstein's drug use, referencing earlier testimony in which Lichtenstein admitted to purchasing mushrooms and LSD on dark web markets. However, he clarified that he was sober during the hacks.
Sterlingov is versus multiple charges, including money laundering, operating a money transmission business without a license, and engaging in money transmission without the required license in the District of Columbia.
Bitfinex hacker reveals his motive
During his testimony, Lichtenstein highlighted the reason for the Bitfinex hack in 2016, saying that he faced problems with his tech startup in San Francisco. He further explained that during that time, he was exhausted by the struggling business. He later recruited his wife, Heather Morgan, to help him hide the source of the funds. Morgan, who called himself the “Crocodile of Wall Street,” sought recognition on social media by rapping about investment strategies.
The government alleges that the couple used false identities to establish online accounts, masking the transaction trail by depositing and withdrawing funds through cryptocurrency exchanges and darknet markets. According to government claims, some misappropriated funds were allocated to purchase non-fungible tokens (NFTs), gold, and Walmart gift cards.
In August 2023, Lichtenstein and his wife formally pleaded guilty to charges of money laundering and conspiracy to commit fraud, ending a seven-year mystery.
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