U.S. Government Statement on Bitfinex Bitcoin Theft

The U.S. government has stated that over 94,000 bitcoins stolen in the 2016 Bitfinex hack by Ilya Lichtenstein and Heather Morgan should be returned to the exchange. This information was noted in a court document filed this week in the U.S. District Court for the District of Columbia.

According to the government’s filing posted on Tuesday, “there is no ‘victim’ for the specific offenses of conviction in this proceeding.” Nevertheless, the Court can mandate voluntary restitution per the defendants’ plea agreements. It was specified that voluntary restitution must encompass all assets seized from the Bitfinex Hack Wallet, and those assets should be returned to Bitfinex as in-kind restitution.

This filing aligns with an October document stating that both Lichtenstein and Morgan, along with Bitfinex parent company iFinex, consider the crypto exchange as the sole victim.

Lichtenstein and Morgan, also known as rapper Razzlekhan, pleaded guilty to a money laundering conspiracy related to the 2016 Bitfinex hack in August 2023. They allegedly conspired to launder 119,754 bitcoins, which was valued at nearly $71 million back in August 2016. The bitcoin seized in 2022 from their devices was valued at almost $4 billion, marking the largest asset seizure by the DOJ to date.

In 2022, Bitfinex planned to sell 80% of any recovered stolen bitcoin to repurchase and burn outstanding UNUS SED LEO tokens issued after the hack to compensate for customer losses—this process would unfold over 18 months. The aim is to eliminate all LEO tokens from circulation, which surged nearly 4% in the last 24 hours.

Morgan and Lichtenstein were arrested last year and charged with conspiracy to commit money laundering and conspiracy to defraud the U.S. Prior to her arrest, Morgan advised businesses on protection against cybercriminals and social engineering practices.

Lichtenstein was sentenced to five years in prison, while Morgan received 18 months in November 2023.