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News

Bitfinex Hacker Unveils Crypto Exchange Hack and Money Laundering Scheme

February 28, 2024 - Around 2 mins mins to read

Key Points:

  • Bitfinex hacker cooperates in money laundering trial, admits breaching exchanges.
  • Testimony reveals use of Bitcoin Fog for laundering, sheds light on 2016 Bitfinex hack.
  • Implication of Bitcoin Fog operator leads to historic seizure, guilty plea from hacker and spouse.
Ilya Lichtenstei, a former hacker for crypto exchange Bitfinex, testified as a cooperating witness for the U.S. government in a money laundering trial in Washington, according to Bloomberg.
Bitfinex Hacker Unveils Crypto Exchange Hack and Money Laundering Scheme
Bitfinex Hacker Unveils Crypto Exchange Hack and Money Laundering Scheme 2

Bitfinex Hacker Testifies in Money Laundering Trial

Bitfinex hacker revealed to the jury that he had infiltrated Bitfinex‘s systems for several months and also breached personal accounts on other crypto exchanges like Coinbase and Kraken. He confessed to utilizing a service called “Bitcoin Fog” for laundering money on ten occasions.

The trial involves Roman Sterlingov, accused of operating the mixing service Bitcoin Fog, which allegedly amassed tens of millions of dollars from darknet markets notorious for illicit drug sales. Sterlingov’s attorney, Tor Ekeland, challenged the prosecution’s case, citing the absence of concrete evidence tying his client to the hybrid service.

Lichtenstein’s testimony is anticipated to unveil insights into the 2016 Bitfinex hack and his laundering methods. He claimed to have hacked Bitfinex due to issues at his San Francisco tech startup. After gaining access to Bitfinex, he devised a method to save customer passwords for accessing accounts at other exchanges. While he admitted to using various mixing services, including Bitcoin Fog, he eventually shifted to Helix for better results.

Guilty Pleas Follow Historic Seizure in Bitfinex Case

Previously, Bitfinex hacker and his wife were arrested on charges of conspiring to launder $4.5 billion in Bitcoin, with $3.6 billion seized by the government, marking the largest financial seizure in history. They pleaded guilty to money laundering conspiracy last year.

The government alleges the couple set up online accounts with fake identities and obscured their transactions through crypto exchanges and darknet markets. Some of the stolen funds were reportedly used to purchase NFTs, gold, and Walmart gift cards.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Bitcoin Fog

Bitfinex

Bitfinex Hack

Ilya Lichtenstei

Avatar of Harold

Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.
News

Bitfinex Hacker Unveils Crypto Exchange Hack and Money Laundering Scheme

Key Points:

  • Bitfinex hacker cooperates in money laundering trial, admits breaching exchanges.
  • Testimony reveals use of Bitcoin Fog for laundering, sheds light on 2016 Bitfinex hack.
  • Implication of Bitcoin Fog operator leads to historic seizure, guilty plea from hacker and spouse.
Ilya Lichtenstei, a former hacker for crypto exchange Bitfinex, testified as a cooperating witness for the U.S. government in a money laundering trial in Washington, according to Bloomberg.
Bitfinex Hacker Unveils Crypto Exchange Hack and Money Laundering Scheme
Bitfinex Hacker Unveils Crypto Exchange Hack and Money Laundering Scheme 4

Bitfinex Hacker Testifies in Money Laundering Trial

Bitfinex hacker revealed to the jury that he had infiltrated Bitfinex‘s systems for several months and also breached personal accounts on other crypto exchanges like Coinbase and Kraken. He confessed to utilizing a service called “Bitcoin Fog” for laundering money on ten occasions.

The trial involves Roman Sterlingov, accused of operating the mixing service Bitcoin Fog, which allegedly amassed tens of millions of dollars from darknet markets notorious for illicit drug sales. Sterlingov’s attorney, Tor Ekeland, challenged the prosecution’s case, citing the absence of concrete evidence tying his client to the hybrid service.

Lichtenstein’s testimony is anticipated to unveil insights into the 2016 Bitfinex hack and his laundering methods. He claimed to have hacked Bitfinex due to issues at his San Francisco tech startup. After gaining access to Bitfinex, he devised a method to save customer passwords for accessing accounts at other exchanges. While he admitted to using various mixing services, including Bitcoin Fog, he eventually shifted to Helix for better results.

Guilty Pleas Follow Historic Seizure in Bitfinex Case

Previously, Bitfinex hacker and his wife were arrested on charges of conspiring to launder $4.5 billion in Bitcoin, with $3.6 billion seized by the government, marking the largest financial seizure in history. They pleaded guilty to money laundering conspiracy last year.

The government alleges the couple set up online accounts with fake identities and obscured their transactions through crypto exchanges and darknet markets. Some of the stolen funds were reportedly used to purchase NFTs, gold, and Walmart gift cards.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.