Bitcoin thief on Bitfinex exchange caught?

[hyudien]

A senior reporter at Forbes launched his article recently by presenting the news that a husband and wife in New York City are suspected of conspiring to launder $4.5 billion worth of bitcoins. We all know that Bitfinex in 2016 has lost $3.6 billion worth of Bitcoins, the rest have been recovered but there are still many remnants that have been the target of searching for years. Now that the news has surfaced, Joe Biden is getting demands to immediately authorize federal executives to regulate national security issues as soon as possible and make cryptocurrencies serious to continue to be monitored.
The facts that incriminate the two couples include the following:

• According to court filings, 34-year-old Ilya Lichtenstein and his wife, Heather Morgan, 31, conspired to launder the proceeds of 119,754 bitcoins—currently worth about $5 billion—that were stolen from the Bitfinex platform after a breach of the cryptocurrency exchange's systems in 2016.
• At the time, the unnamed hacker allegedly made more than 2,000 unauthorized transactions transferring the stolen cryptocurrency to a digital wallet under Lichntenstein's control, authorities said Tuesday.
  
• They allege Lichentenstein and Morgan then employed "numerous sophisticated laundering techniques"—including using fake identities to set up online accounts and running computer programs to automate transactions—to transfer about 25,000 stolen coins out of the wallet and into financial accounts jointly controlled by the couple over the next five years.
  
• According to the DOJ on Tuesday, special agents obtained court-authorized search warrants to go through the couple's online accounts and were able to find files containing the private keys required to access a digital wallet containing 94,000 bitcoins representing about $3.6 billion in stolen funds.
  
• In a statement, Deputy Attorney General Lisa Monaco said the recovered funds marked the DOJ's "largest financial seizure ever" and called the case proof that "cryptocurrency is not a safe haven for criminals."
• The couple has been charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and conspiracy to defraud the United States, which carries a maximum sentence of five years.

TANGENT
The price of bitcoin pared recent gains after the announcement, falling nearly 2% to $42,910.

CRUCIAL QUOTE
“Cryptocurrency and the virtual currency exchanges trading in it comprise an expanding part of the U.S. financial system, but digital currency heists executed through complex money laundering schemes could undermine confidence in cryptocurrency,” U.S. Attorney Matthew M. Graves said in a Tuesday statement.

KEY BACKGROUND
Ransomware attacks on Colonial Pipeline and meatpacker JBS, which sparked widespread gasoline shortages and meat-plant shutdowns, placed a massive spotlight on anonymity concerns last summer. In both instances, the companies paid millions in bitcoin to hackers taking advantage of the cryptocurrency's anonymized transactions. “The only way you can begin to get on top of the pervasive” ransomware problem is “to develop a pattern,” Sen. Roy Blunt (R-Mo.) said last summer after the DOJ seized $2.3 million in bitcoin as part of its investigation into Colonial Pipeline. At the time, Blunt called cryptocurrencies the “ransom payment of choice” for hackers and said lawmakers shouldn’t allow cryptocurrencies to operate “behind the scenes."

Sources I read : Feds Seize $3.6 Billion In Stolen Bitcoin, Arrest Couple Five Years After Massive Crypto Exchange Hack

The question that comes to mind is do you think the FBI will return it to its rightful owner?

[stomachgrowls]

The question that comes to mind is do you think the FBI will return it to its rightful owner?

Neither Yes or no but if they would see that there are no claims or complaints then for sure they would really took possession of those coins but to think off that this news came out then those

Bitfinex exchange owners would really be poking up their memory that they do have some funds lost on this platform and this is where it do starts on trying to claim on what they do possess.

Lets see if they would grant it out and would be giving 100% of those money back or just partial.

[crwth]

It's great that they have now been recovered; five years is a long time already. They could've moved or something, but the Feds managed to get them amazingly. They are getting better at it, which is good, so those affected in this hack could get what they deserve. Is that the next step for the exchange/fund recovered?

[Upgrade00]

• According to the DOJ on Tuesday, special agents obtained court-authorized search warrants to go through the couple's online accounts and were able to find files containing the private keys required to access a digital wallet containing 94,000 bitcoins representing about $3.6 billion in stolen funds.
  

It is somewhat ironic that they could attempt to launder such amounts, but could not figure out a safer way of storing private keys or recovery seeds, besides storing it online.

The question that comes to mind is do you think the FBI will return it to its rightful owner?

This should be determined after the money have been successfully recovered, although I think if the scammed users are to be refunded, it would be done with the exchange rate at the time of the incident and not now.[/list]

[Fortify]

A senior reporter at Forbes launched his article recently by presenting the news that a husband and wife in New York City are suspected of conspiring to launder $4.5 billion worth of bitcoins. We all know that Bitfinex in 2016 has lost $3.6 billion worth of Bitcoins, the rest have been recovered but there are still many remnants that have been the target of searching for years. Now that the news has surfaced, Joe Biden is getting demands to immediately authorize federal executives to regulate national security issues as soon as possible and make cryptocurrencies serious to continue to be monitored.
The facts that incriminate the two couples include the following:



Sources I read : Feds Seize $3.6 Billion In Stolen Bitcoin, Arrest Couple Five Years After Massive Crypto Exchange Hack

The question that comes to mind is do you think the FBI will return it to its rightful owner?

It's hard to know what the US government or law enforcement will do with the stolen money, with the way they so easily take money via "civil forfeiture" all around the country. That would be the right thing to do, although there will obviously be an amount lost by the laundering techniques, you'd expect a large chunk of it to be recovered. As is so common, greed was the major downfall of these criminals, if they had figured out a way to just withdraw and keep a million dollars, it's very possible they could have lived a very comfy life but instead they wanted more and more.They could even have obfuscated their tracks by dumping large chunks of money on unsuspecting people and muddying the trail for investigators - but they wanted it all and will now likely spend a large part of their lives in prison instead.

[bitbollo]

it seems so. Today I read the article with some details on the Washington post.

https://www.washingtonpost.com/national-security/2022/02/08/bitfinex-hack-bitcoin-arrests/

I see a positive and a negative aspect in the news itself. after all it is possible to trace these epochal thefts ... Its like to steal a large amount of money in cash ... it is literally impossible to manage, to hide or exchange all of them for goods ...

[CaVO32]

• According to the DOJ on Tuesday, special agents obtained court-authorized search warrants to go through the couple's online accounts and were able to find files containing the private keys required to access a digital wallet containing 94,000 bitcoins representing about $3.6 billion in stolen funds.
  

It is somewhat ironic that they could attempt to launder such amounts, but could not figure out a safer way of storing private keys or recovery seeds, besides storing it online.

The question that comes to mind is do you think the FBI will return it to its rightful owner?

This should be determined after the money have been successfully recovered, although I think if the scammed users are to be refunded, it would be done with the exchange rate at the time of the incident and not now.[/list]

I am not in favor of the couple's activities here, but keys storing online? You are right, that's not a very safe way to store private keys. They should know better. Because if the agents haven't found those keys and they will make a stand that they lost the keys (but will get it once they are out of prison - just giving one scenario), they can still be rich after their sentence. But anyway, on the thought that FBI got a hold of multi-billion dollar heist is great! I don't know if Bitfinex already refunded their customers but if not, they have hope now to get it back.

[ChiBitCTy]

It amazes me that these hackers with great skills will make such bonehead moves like not knowing how properly store bitcoin/cryptocurrency.  The other thing that is really annoying about this is those bitcoin pundits who say "see bitcoin isn't anonymous and is hackable" which of course we all know bitcoin has never claimed to be as well as we know that it wasn't properly stored.  Super annoying smh. 

[Juse14]

The question that comes to mind is do you think the FBI will return it to its rightful owner?

Regarding this question I think it will be a long journey to get the stolen money back to its rightful owner. They (the rightful owners) must be able to provide strong evidence that it really belongs to them. Because it will be difficult if you are faced with the government, everything must be in accordance with the processes and procedures that have been determined, I even think they can enter the courtroom until their money is returned.
If they do not have strong evidence to claim it is theirs, then they must be willing to have their assets (money) taken over by the authorities (back to the state).
Even more problematic, the US government has not legalized cryptocurrencies, and this is an obstacle because the government will also follow up on the owner for being connected to what is considered "illegal".

[cryptomaniac_xxx]

The question that comes to mind is do you think the FBI will return it to its rightful owner?

This comes from Bitfinex themselves:

If Bitfinex receives a recovery of the stolen bitcoin, as described in the UNUS SED LEO token white paper, Bitfinex will, within 18 months of the date it receives that recovery use an amount equal to 80% of the recovered net funds to repurchase and burn outstanding UNUS SED LEO tokens. These token repurchases can be accomplished in open market transactions or by acquiring UNUS SED LEO in over-the-counter trades, including directly trading bitcoin for UNUS SED LEO.

We want to express our appreciation for the dedication and hard work by the DOJ team that led to this great success. We will continue to support their efforts.

https://www.bitfinex.com/posts/766

So for sure they are very much interested on what's left of the hacked bitcoins. So I'm sure Bitfinex is very happy of the news and it seems there are still a lot of bitcoin in the possession of the 2 person accused.

[btc_angela]

Just for the record, they are not the hacker or the bitcoin thief, the hackers were 2 Israeli Eli and Assaf Gigi.

They just laundered the bitcoin that has been stolen, and they tried to laundered some and even went as far as using fake online identities, depositing to dark market and other methods to hide their identifies. But US DOJ uses more sophisticated method to unravel the addresses and putting a connection to the physical address and names.

[cryptoaddictchie]

The question that comes to mind is do you think the FBI will return it to its rightful owner?

As long as those proven stolen or loss funds can show proof of their losses due to the hack then I think FBI should return it. They have no rights to touch it I guess, and its not a government property.  The process could be a long method but for sake of hope of those who losses fund then its better they make up for it. I wonder how FBI will manage this.

This could be a pump breaker for btc as the market turns green then suddenly this kind appear. Probably a scare again to community.

[FanEagle]

I am not in favor of the couple's activities here, but keys storing online? You are right, that's not a very safe way to store private keys. They should know better. Because if the agents haven't found those keys and they will make a stand that they lost the keys (but will get it once they are out of prison - just giving one scenario), they can still be rich after their sentence. But anyway, on the thought that FBI got a hold of multi-billion dollar heist is great! I don't know if Bitfinex already refunded their customers but if not, they have hope now to get it back.

Let’s just hope that the FBI would be returning the coins to the rightful owners and not keep it. Then As for the case of storing keys online, well they have been storing it online for so many years now, five years like the op has said? And no one has had access to it, except that the FBI took permission from court to be able to access their online Accounts and recover the private keys. If it wasn’t like that, then those keys would have been there and no one would have known about it.

Even if you decide to store your keys offline, there are still some risks that can be involved, you can even lose the paper where it is written or something might happened to the storage where you have stored it. So there isn’t really 100% safe option, it’s all about you knowing how to handle whatever option you take .

[naira]

Here I also take several points that after the search and from the evidence that has been collected, the government and FBI staff definitely do not want to just return it. Bitfinex may soon provide data on victims who have suffered losses due to the hack. Even if Bitcoin is returned, it may take quite a long time and hamper the circulation of Bitcoin in the market because it is still in the hands of the FBI.

I don't know, I think this will still be complicated and difficult to solve, even if the stolen Bitcoins have been returned, but it is not necessarily a legal guarantee that the FBI will still hold Bitcoin as evidence that is still under their control.

[Lucius]

Just for the record, they are not the hacker or the bitcoin thief, the hackers were 2 Israeli Eli and Assaf Gigi.

This is just proof that the authorities have very good tools with which they can trace every transaction, even if someone tries to use somewhat sophisticated methods to hide the traces. I didn't find out anywhere whether these people used mixers, but they used Wasabi for at least part of the coins - although they made a lot of stupid moves that exposed them. In this particular case, we could say that they took too big a bite to chew, and in the end greed and carelessness cost them their freedom. The sentence for such a crime is a maximum of 25 years in total, and even if they are sentenced to such a sentence, I am sure they will not be in prison for more than 15-20 years.

... analysts found that a variety of money laundering techniques were used, including sending the funds through darknet markets, like Alphabay and Hydra, as well as the Wasabi Wallet privacy wallet, which was used to hide the blockchain money trail.

"Some of the funds were also sent to regulated cryptocurrency exchanges that perform KYC checks on their customers, and it is likely that the suspects were identified by tracing the stolen funds to these services," If convicted, the two are facing a maximum sentence of 20 years for the first charge and five years in prison for the second.

[tbct_mt2]

Caught or not, compensate to users or not, it does not have effects on Bitcoin in the long run. Because the times when exchanges store all or most of their capital in hot wallets which are more vulnerable to hacks has gone away years ago.

Nowadays, crypto exchanges have better strategies and infrastructures to deal against hacks, compromise, fund stealing. Hackers can successfully hack and steal some fund but not enough to crack down any good exchange.

Also good exchanges do have enough reserved fund to compensate users and sacrifice their earnings from trading fees during few months. It's unofficially help them to build up reputation and in long run will help them to get more customers, then more income.

[Lucius]

After I have read your story the same question that you asked was the same thing that crossed through my mind, whether the FBI would be returning the coins to the rightful owners? Or are they also going to seize it and set it up for auction? But rightfully I think that the coins should be returned to Bitfinex exchange and to the owners of the assets.

Just a few posts above your there are answers to your questions  - is it hard to read a few posts? I guess you have some more important work to do...

https://bitcointalk.org/index.php?topic=5384973.msg59197512#msg59197512

[mia_houston]

Caught or not, compensate to users or not, it does not have effects on Bitcoin in the long run. Because the times when exchanges store all or most of their capital in hot wallets which are more vulnerable to hacks has gone away years ago.

Nowadays, crypto exchanges have better strategies and infrastructures to deal against hacks, compromise, fund stealing. Hackers can successfully hack and steal some fund but not enough to crack down any good exchange.

Also good exchanges do have enough reserved fund to compensate users and sacrifice their earnings from trading fees during few months. It's unofficially help them to build up reputation and in long run will help them to get more customers, then more income.

Currently the US Justice Department has confiscated around 94,000 bitcoins from the case, if we look at it from a legal point of view, of course all the evidence will be returned to its rightful owner after the trial has been carried out, in this case Bitfinex is a platform that has the responsibility to return all the hacked assets to the users or owners, but what I wonder if the hacking case is revealed after quite a long time and we all know the FBI is one department that has great people and is supported by advanced technology, but it still takes time long time to catch the hackers,  great is it that the hackers are able to avoid the FBI?

[hyudien]

Caught or not, compensate to users or not, it does not have effects on Bitcoin in the long run. Because the times when exchanges store all or most of their capital in hot wallets which are more vulnerable to hacks has gone away years ago.

Nowadays, crypto exchanges have better strategies and infrastructures to deal against hacks, compromise, fund stealing. Hackers can successfully hack and steal some fund but not enough to crack down any good exchange.

Also good exchanges do have enough reserved fund to compensate users and sacrifice their earnings from trading fees during few months. It's unofficially help them to build up reputation and in long run will help them to get more customers, then more income.

Currently the US Justice Department has confiscated around 94,000 bitcoins from the case, if we look at it from a legal point of view, of course all the evidence will be returned to its rightful owner after the trial has been carried out, in this case Bitfinex is a platform that has the responsibility to return all the hacked assets to the users or owners, but what I wonder if the hacking case is revealed after quite a long time and we all know the FBI is one department that has great people and is supported by advanced technology, but it still takes time long time to catch the hackers,  great is it that the hackers are able to avoid the FBI?

The activities that have been monitored for the last 5 years have caught them off guard and finally when greed begins to make them shop without realizing that everything is monitored in their every move. Several transactions share various addresses then the government, especially the FBI, investigates very carefully. The last hope is that everything is returned to the right party because it has been lost for several years. As a result, until now we do not know what the next action will be, such as the motives and people who are indicated to have a close relationship with the hacking.

[so98nn]

FBI won’t return it to anyone because for them there is no rightful owner in illegal cases. They will only release it when they confirm the identity theft but that too on the court orders. So the owner in this case Bitfinex will have to fight the case for their clients; whose bitcoins or any assets that were lost in the hack.

Moreover, it’s not only about coins but also data integrity issue. So I’m not sure how they will bend the case really. But Bitfinex is the victim who should plead for the recovery of coins from FBI.