Two arrested for laundering $4.5 billion in stolen cryptocurrency
Two persons have been arrested in Manhattan for an alleged conspiracy to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, a virtual currency exchange, presently valued at approximately $4.5 billion, the U.S Department of Justice has announced.
A man, 34, and his wife, 31, both of New York, allegedly conspired to launder the proceeds of 119,754 bitcoin that were stolen from Bitfinex’s platform after a hacker breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions. Those unauthorized transactions sent the stolen bitcoin to a digital wallet under the man’s control.
Over the last five years, approximately 25,000 of those stolen bitcoins were transferred out of the man’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by the couple. The remainder of the stolen funds, comprising more than 94,000 bitcoin, remained in the wallet used to receive and store the illegal proceeds from the hack.
The special agents, with court-authorized search warrants, managed to obtain access to the online accounts controlled by the couple, and recover more than 94,000 bitcoins that had been stolen from Bitfinex. The recovered bitcoins were valued at over $3.6 billion at the time of seizure.
“The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division.
The couple is 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 in prison. The criminal complaint describes the sophisticated laundering techniques used, such as:
- using fictitious identities to set up online accounts;
- utilizing computer programs to automate transactions, a laundering technique that allows for many transactions to take place in a short period of time;
- depositing the stolen funds into accounts at a variety of virtual currency exchanges and darknet markets and then withdrawing the funds;
- converting bitcoin to other forms of virtual currency, a practice known as “chain hopping” and using U.S.-based business accounts to legitimize their banking activity.
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