The U.S. Department of Justice (DOJ) has arrested two individuals for an alleged conspiracy to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, a virtual currency exchange. According to the DOJ, the cryptocurrency that was seized is presently valued at $4.5 billion. Law enforcement has seized over $3.6 billion in cryptocurrency linked to the Bitfinex hack.
“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa O. Monaco. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”
The Wall Street Journal reported that the two people were both arrested without incident Tuesday morning in Manhattan. They have promoted themselves on social media as entrepreneurs with deep knowledge of tech and a love of travel.
According to The Wall Street Journal, at the couple’s appearance in Manhattan court, U.S. Magistrate Judge Debra Freeman set bond at $5 million for Mr. Lichtenstein and $3 million for Ms. Morgan, requiring that their parent’s homes be posted as security. The judge also ordered that they not have devices with internet access and prohibited them from conducting cryptocurrency transactions.
The two are facing charges related to conspiracy to commit money laundering and conspiracy to defraud the U.S. They were not charged with the hack of Bitfinex.
IBM explains that the blockchain has an immutable record of transactions. No participant can change or tamper with a transaction after it’s been recorded to the shared ledger. Transactions are recorded only once, eliminating the duplication of efforts that’s typical of traditional business records.
In short, the couple who allegedly attempted to launder a large amount of cryptocurrency left a trail of transactions that the Department of Justice used to discover the scheme. I’ve seen people on social media suggest that the blockchain is private and untraceable. However, the DOJ was very able to find the information they needed.