The Bitfinex cryptocurrency exchange was hacked in August 2016. [1] 119,756 bitcoin, worth about US$72 million at the time, were stolen. [1]
In February 2022, the US government recovered and seized a portion of the stolen bitcoin, then worth US$3.6 billion, [2] by decrypting a file owned by Ilya Lichtenstein that contained addresses and private keys associated with the stolen funds. [3] Lichtenstein and his wife, Heather R. Morgan, were charged with conspiracy to launder the stolen bitcoin. [3] In August 2023, Lichtenstein admitted to committing the theft. Both Lichtenstein and Morgan pleaded guilty to money laundering. [4]
In August 2016, the Bitfinex cryptocurrency exchange, based in Hong Kong, announced it had suffered a security breach. [5] Around 2,000 approved transactions were sent to a single wallet from users' segregated wallets. [6] [7] Immediately thereafter, Bitcoin's trading price plunged by 20%, causing the value of the stolen Bitcoin to dip to US$58 million. [1] After learning of the breach, Bitfinex halted all Bitcoin withdrawals and trading [8] and said it was tracking down the perpetrators of the hack. [7] Exchange customers, even those whose accounts had not been broken into, had their account balance reduced by 36% and received BFX tokens in proportion to their losses. [9] The exchange's access to U.S. dollar payments and withdrawals was then curtailed. The hack happened even though Bitfinex was securing the funds with BitGo, which uses multiple-signature security. [10]
In July 2023, Bitfinex worked with the Department of Homeland Security to recover about $315,000 in cash and cryptocurrencies stolen in the 2016 breach. The funds will be redistributed to holders of Bitfinex's Recovery Right Tokens, digital coins issued to people who suffered financial losses due to the hack. [11]
Small amounts of money began to move out of the single wallet in early 2017 through the marketplace AlphaBay to launder it. After AlphaBay was shuttered by international law enforcement led by the FBI, the money was rerouted to the Russian marketplace Hydra. The shutdown of AlphaBay may have given law enforcement access to the service's internal transaction logs to connect pieces together. [6]
In February 2022, a New York couple, Ilya Lichtenstein (age 34) and his wife Heather R. Morgan (age 31), [6] were charged by US federal authorities with conspiring to launder the bitcoin, which was then worth US$3.6 billion. [2] [12] Each of the pair faces a maximum sentence of 20 years in prison for conspiracy to launder money, and a maximum sentence of five years for conspiracy to defraud the United States. [12] [13] Neither was charged with actually committing the hack. [14] Law enforcement were able to acquire a search warrant for a cloud storage service used by Lichtenstein, obtaining a spreadsheet of wallet addresses linked to the hack, and their passwords. One of the wallets had around 94,000 Bitcoin. Due to the openness and transparency of the blockchain, law enforcement was able to track the money; and obtaining the passwords allowed them to seize it. [6] [15] [16] They were charged in the case with a document known as an information, which is a type of charging document that federal prosecutors typically use when defendants have agreed to plead guilty. [17]
Some of the funds were moved towards more traditional financial accounts and used on gold, NFTs, and a Walmart gift card spent on Uber rides and a PlayStation. [18] Though hundreds of millions of dollars were converted to fiat currency, 80% of the Bitcoin were still in the original wallet at the center of the hack. [6]
Shortly after the couple's arrest, Netflix ordered a documentary series that will cover the story of Lichtenstein's and Morgan's crimes.[ needs update ] [19]
In August 2023 both pleaded guilty. Lichtenstein additionally admitted carrying out the theft. [4]
A cryptocurrency exchange, or a digital currency exchange (DCE), is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies. Exchanges may accept credit card payments, wire transfers or other forms of payment in exchange for digital currencies or cryptocurrencies. A cryptocurrency exchange can be a market maker that typically takes the bid–ask spreads as a transaction commission for its service or, as a matching platform, simply charges fees.
A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.
Charles Shrem IV is an American entrepreneur and bitcoin advocate. He co-founded the now-defunct startup company BitInstant, and is a founding member of the Bitcoin Foundation. In 2014 he was sentenced to two years in prison for aiding and abetting the operation of an unlicensed money-transmitting business related to the Silk Road marketplace. He was released from prison in 2016. In 2017, he joined Jaxx and served as its chief operating officer, and founded cryptocurrency advisory CryptoIQ.
Bitcoin is a cryptocurrency, a digital asset that uses cryptography to control its creation and management rather than relying on central authorities. Originally designed as a medium of exchange, Bitcoin is now primarily regarded as a store of value. The history of bitcoin started with its invention and implementation by Satoshi Nakamoto, who integrated many existing ideas from the cryptography community. Over the course of bitcoin's history, it has undergone rapid growth to become a significant store of value both on- and offline. From the mid-2010s, some businesses began accepting bitcoin in addition to traditional currencies.
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BitGo, Inc. is a digital asset trust company and security company, headquartered in Palo Alto, California. It was founded in 2013 by Mike Belshe and Ben Davenport. Galaxy Digital announced its acquisition of BitGo in 2021 for $1.2 billion, although this acquisition was announced to have been canceled in 2022 after the crypto downturn, with BitGo continuing as an independent company.
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Bitfinex is a cryptocurrency exchange owned and operated by iFinex Inc, and is registered in the British Virgin Islands. Bitfinex was founded in 2012. It was originally a peer-to-peer Bitcoin exchange, and later added support for other cryptocurrencies.
A cryptocurrency wallet is a device, physical medium, program or an online service which stores the public and/or private keys for cryptocurrency transactions. In addition to this basic function of storing the keys, a cryptocurrency wallet more often offers the functionality of encrypting and/or signing information. Signing can for example result in executing a smart contract, a cryptocurrency transaction, identification, or legally signing a 'document'.
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Alexander Vinnik is a Russian computer expert. From 2011 to 2017, he worked at BTC-e, a Russian cryptocurrency exchange.
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Cryptocurrency and crime describe notable examples of cybercrime related to theft of cryptocurrencies and some methods or security vulnerabilities commonly exploited. Cryptojacking is a form of cybercrime specific to cryptocurrencies that have been used on websites to hijack a victim's resources and use them for hashing and mining cryptocurrency.
Changpeng Zhao, commonly known as CZ, is a Chinese-born Canadian businessman. Zhao is the co-founder and former CEO of Binance, the world's largest cryptocurrency exchange by trading volume as of November 2023. He resigned as the CEO in November 2023 after pleading guilty to a money laundering charge in the United States.
BitMEX is a cryptocurrency exchange and derivative trading platform. It is owned and operated by HDR Global Trading Limited, which is registered in the Seychelles.
Blockchain analysis is the process of inspecting, identifying, clustering, modeling and visually representing data on a cryptographic distributed-ledger known as a blockchain. The goal of blockchain analysis is to discover useful information about different actors transacting in cryptocurrency. Analysis of public blockchains such as Bitcoin and Ethereum is typically conducted by private companies like Chainalysis, TRM Labs, Elliptic, Nansen, CipherTrace, Elementus, Dune Analytics, CryptoQuant.
SafeMoon LLC was a cryptocurrency and blockchain company created in March 2021. The company also has a SafeMoon token (SFM) which trades on the BNB Chain blockchain. The token charges a 10% fee on transactions, with 5% redistributed to token holders and 5% directed to wallets in a different currency, Binance Coin (BNB), controlled by the coin's authors. The token reached its all time high market cap in April 2021 of $17b. As of December 2022, it has since dropped 98.7% in value to $223m.
Heather Rhiannon Morgan, also known as Razzlekhan, is an American entrepreneur, rapper and convicted felon. According to New York authorities, she laundered the proceedings from a heist of US$4.5 billion in cryptocurrencies.
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