top of page
Writer's pictureAnna Stylianou

Bitfinex Hack Money Laundering Methods: Lessons learned


Bitcoin money laundering

If you think crypto is anonymous, think again.


In November 2024, Ilya Lichtenstein was convicted for the 2016 Bitfinex hack, where he stole 119,754 Bitcoins, worth $71 million at the time. His wife, Heather “Razzlekhan” Morgan, was sentenced to 18 months for helping launder the stolen funds.


According to the U.S. Department of Justice, the couple used various techniques to hide their tracks, including:


↳ Creating fictitious identities to set up accounts


↳ Automating transactions with computer programs


↳ Depositing and withdrawing funds via darknet markets and exchanges


↳ Converting Bitcoin into other cryptocurrencies (“chain hopping”)


↳ Using mixing services to obscure fund origins


↳ Moving funds through U.S. business accounts


↳ Exchanging funds for gold coins


How They Were Caught:


↳ After the hack, the couple initially moved small amounts of Bitcoin to avoid detection.


↳ By 2019, they began transferring tens of millions of dollars, which attracted attention of the authorities.


↳ In 2021, they used more advanced methods like intermediary addresses and mixing services, but these still left traces.


↳ In 2022, a search warrant at their home uncovered a wallet with private keys, enabling authorities to seize 94,636 Bitcoins.


Lessons learned for Anti-Financial Crime Professionals 


Blockchain isn’t a haven for bad actors— because it leaves a trail.


Law enforcement and crypto exchanges are becoming highly skilled at tracking illegal activity on the blockchain. Their goal? To keep bad actors out of the system. 


Ultimately, is crypto used for money laundering?


Yes, there is money laundering in crypto, as highlighted in reports such as Chainalysis’ 2024 Crypto Money Laundering Report and TRM Labs’ The Illicit Crypto Economy – Key Trends from 2023 (google them - they are free!)


However, both reports indicate that there has been a drastic decrease in illicit crypto activity from 2022 to 2023. And compared to money laundering in traditional finance, illicit crypto activity represents only a small percentage.


So, is crypto easy for money laundering?


Not as easy as it seems. Blockchain transparency makes laundering funds challenging, as transactions are permanently recorded and traceable.


What the Bitfinex Hack Means for You


If you are a crypto provider or a fintech startup, you need to ensure that you understand how your company may be abused for money laundering or other illegal activities... including preventing bad actors from opening accounts in your company.


Otherwise, can you manage the risk? That's why it's crucial to ask for help!


We are working with the best associates to offer AML, Sanctions and MiCA compliance solutions for companies who want to build a strong anti-financial crime environment!


Contact us to learn more about our services.


10 views0 comments

コメント

5つ星のうち0と評価されています。
まだ評価がありません

評価を追加
bottom of page