Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen Cryptocurrency

February 8, 2022

Two individuals were arrested this morning 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. Thus far, law enforcement has seized over $3.6 billion in cryptocurrency linked to that hack.

“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa O. Monaco. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”

“Today, federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes.”

Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, both of New York, New York, are scheduled to make their initial appearances in federal court today at 3:00 p.m. in Manhattan.

According to court documents, Lichtenstein and Morgan 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 Lichtenstein’s control. Over the last five years, approximately 25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan. 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. After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex. The recovered bitcoin was valued at over $3.6 billion at the time of seizure.

“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,” said U.S. Attorney Matthew M. Graves for the District of Columbia. “The Department of Justice and our office stand ready to confront these threats by using 21st century investigative techniques to recover the stolen funds and to hold the perpetrators accountable.”

Former Supervisory Corrections Officer Sentenced for Repeatedly Tasing Restrained Detainee

November 20,2020

Former supervisory corrections officer Mark Bryant, 42, was sentenced today to five years in prison for repeatedly tasing a restrained pretrial detainee inside the Cheatham County Jail in Tennessee. In January 2020, a jury in the Middle District of Tennessee convicted Bryant of two counts of violating Title 18, U.S. Code, Section 242, for using excessive force while acting under the color of law.

“The defendant abused his power as a supervisory corrections officer by assaulting a restrained person in his custody. Officers who willfully use excessive force both violate the Constitution and erode the public trust in law enforcement” said Assistant Attorney General Eric Dreiband of the Justice Department’s Civil Rights Division. “The Justice Department is committed to prosecuting these abuses of power and upholding the Constitution and laws that protect us all.”

“The extraordinary abuse of power displayed by Bryant was both disturbing and disappointing to the many fine men and women in law enforcement who strive every day to carry out their duties with honor and professionalism,” said U.S. Attorney Donald Q. Cochran for the Middle District of Tennessee. “We can never be complacent in our responsibility to protect every citizen from such abuse. Justice has been served and I commend our trial team and our law enforcement partners for their outstanding work in the investigation, preparation and prosecution of this case.”

“When a law enforcement officer violates the civil rights of another, he brings shame on the badge," said Douglas Korneski, Special Agent in Charge of the Memphis Field Office of the FBI. "The sentencing of former Corrections Officer Mark Bryant sends a strong message that law enforcement officers or any other government employees who abuse their authority and use unlawful force will be vigorously investigated and prosecuted. Our citizens have a fundamental and constitutional right to ethical treatment by employees of federal, state, and local government."

Evidence presented at trial established that, on Nov. 5, 2016, Bryant repeatedly tased an 18-year-old detainee who was restrained and surrounded by officers inside the jail. At approximately 8:00 p.m. that night, Bryant tased the detainee four times for a total of 50 seconds while the detainee was strapped into a restraint chair. Bryant returned two hours later and tased the detainee again, this time while the detainee was handcuffed, shackled, and compliant. As a result of Bryant’s unjustified uses of force, the detainee suffered bodily injury, including burns that an officer on the scene described as making the detainee’s skin look like “raw hamburger meat.” As the senior officer at the scene, Bryant then directed his colleagues not to submit reports regarding his uses of force on the detainee.