Suspects Accused of Laundering Funds Stolen from Bitfinex in 2016 Arrested Today in New York

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Suspects Accused of Laundering Funds Stolen from Bitfinex in 2016 Arrested Today in New York

Earlier today, Heather R. Morgan and Ilya “Dutch” Lichtenstein, two suspects accused of laundering funds stolen from Bitfinex in 2016, were arrested in New York. Hints of this action were revealed last week, when billions of dollars worth of Bitcoin linked to the hack were transferred to a single address, now known to be under the control of the IRS. The arrests mark a dramatic milestone in an investigation that spanned six years and involved billions of dollars in assets. At the time of the breach, 119,754 BTC was valued at approximately $71 million. Due to the increase in the value of BTC since the breach, the stolen funds are valued at over $4.5 billion as of February 2022.

The alleged launderers of the Bitfinex funds went to great lengths to conceal their connections to the assets, laundering the Bitcoin in multiple waves in the years after the hack. Initially cautious, withdrawals in the months immediately after the theft could be measured in tens and hundreds of thousands of dollars. During a long hiatus of nearly two years between April 2017 and April 2019, no funds at all were withdrawn. Then, beginning in April 2019 tens of millions were withdrawn and laundered. These periodic withdrawals culminated in April 2021 when nearly $800 million of the stolen funds awakened and dispersed to thousands of intermediary addresses en-route to a mixing service. The alleged launderers used mixing services and darknet markets to move funds over the years.

TRM Graph: Excerpt of thousands of deposits to the Wasabi mixing service conducted by the Bitfinex hackers in April 2021

Read the DOJ announcement here and stay tuned for more analysis from TRM.

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