Justice Department seizes $3.6B in Bitcoin and arrests married couple

WASHINGTON >> The Justice Department said Tuesday that it had seized over $3.6 billion worth of stolen bitcoins and arrested a married couple accused of laundering the cryptocurrency that hackers had stolen six years ago.

The couple, Ilya Lichtenstein, 34, and Heather Morgan, 31, were accused in a criminal complaint of conspiring to launder 119,754 bitcoins that had been stolen in 2016 from Hong Kong-based Bitfinex, one of the world’s largest virtual currency exchanges.

The value of the currency at the time of its seizure last week makes it the department’s largest financial seizure ever, officials said.

A Justice Department official declined to comment on whether Lichtenstein and Morgan had been involved in the hacking itself.

The breach in 2016 was among a spate of hackings into currency exchanges that have allowed for the theft of large amounts of digital currency. Even when the stolen funds were recovered, the thefts underscored the security vulnerabilities in the relatively new world of cryptocurrency. In some cases, the incidents drastically affected cryptocurrency values.

The arrests on Tuesday “show that cryptocurrency is not a safe haven for criminals,” Lisa Monaco, the deputy attorney general, said in a statement. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions.”

Lichtenstein and Morgan appeared in Manhattan federal court in New York Tuesday afternoon. A judge ordered them released on bond: $5 million in Lichtenstein’s case and $3 million in Morgan’s. A lawyer representing them did not immediately respond to a request for comment.

Lichtenstein, who goes by the nickname Dutch, has both American and Russian citizenship and has described himself as a tech entrepreneur, according to the complaint. Morgan describes herself on her LinkedIn page as “a serial entrepreneur” and “irreverent comedic rapper.” The complaint, which also charges the couple with conspiracy to defraud the United States, suggests Morgan also goes by the alias Razzlekhan.

The total 119,754 bitcoins that were stolen, worth about $71 million when Bitfinex was hacked in 2016, are now worth more than $4.5 billion, according to the Justice Department.

With more Americans buying and selling cryptocurrencies like Bitcoin, regulators have brought some large exchanges in the United States under official oversight.

This article originally appeared in The New York Times.