Bitfinex Hacker Deserves 5-Year Sentence for Laundering $8 Billion in Stolen Bitcoin: DOJ

The hacker behind the $8 billion Bitfinex exchange attack of 2016 should spend five years in prison, according to U.S. prosecutors.

Bitfinex hacker Ilya Lichtenstein used his "significant technical skills," as the U.S. District Court put it, to launder the digital funds with his wife as co-conspirator. Both pleaded guilty last year. The DOJ has already suggested that his wife, Heather “Razzlekahn” Morgan, the self-proclaimed "Crocodile of Wall Street," spend 18 months in prison for her role in laundering the stolen funds.

Speaking on the length of sentence, government lawyers told a federal judge in Washington, "A strong sentence in this case will help to break this cycle [of normalizing the impact on victims]."

A total of 119,756 Bitcoin, worth $71.8 million at the time, was stolen—making it one of the biggest hacks in the history of Bitcoin. This resulted in a Bitcoin price drop of 20% from $600 to $400. But now that the Bitcoin price has climbed above $67,000 in the past day, the stolen BTC is worth more than $8 billion.

A charge of money laundering conspiracy carries a maximum sentence of 20 years. The shorter, 5-year sentence recommendation from the DOJ was given following a plea deal that was agreed after the arrest of the pair in February 2022.

After the hack in 2016, the DOJ says the pair “used false and fictitious identifying information to establish accounts, made false and fraudulent representations, and lied to and deceived virtual currency exchanges and other financial institutions that they used to launder the illegal proceeds of the 2016 hack of Bitfinex.”

Lichtenstein should be given the longer five year sentence as he was the instigator and main person involved in the hack that secured the funds, the DOJ reasoned, while his wife worked on the laundering part solely and should get 18 months. She told the court that she found out about the hack in 2020, when she then began to help him launder the money.

Razzlekhan may finish her prison sentence and come out to find her life on the big screen following several deals announced to make TV and movies about the hack. Chloë Grace Moretz has been announced in a movie called "Dutch & Razzlekhan," and Lily Collins has been announced as the lead in a Hulu series called "Razzlekhan: The Infamous Crocodile of Wall Street."

A spokesperson from the exchange shared with Decrypt that "Bitfinex continues to work globally with law enforcement agencies, digital token exchanges, and wallet providers to recover the Bitcoin stolen in the 2016 hack."

The DOJ recommendations on sentencing are the preamble to the judge’s final ruling. The pair are due to be sentenced in November.

Edited by Stacy Elliott.