the Fed requests 18 months in prison for the Bitfinex hacker

The US federal prosecutors, also known as the Fed, have requested 18 months in prison for one of the Bitfinex hackers.

With a long document presented to the District Court of Columbia, the federal authorities explicitly request that the defendant be sentenced to a period of 18 months of imprisonment, followed by 3 years of probation.

The hack at Bitfinex: a leap into 2016

The hack against the crypto exchange Bitfinex occurred in August 2016. 

119,756 BTC were stolen from the exchange accounts, with a total value that at the time amounted to about 72 million dollars. 

It should be remembered that after the great bull run of 2013, in 2014/2015 there was the worst bear-market in the history of Bitcoin.

Nowadays, 119,756 BTC would have a market value of over 7.3 billion dollars, or one hundred times more than what they were worth back then. 

Bitfinex survived that hard blow by effectively reaching an agreement with its users, whose account balances were reduced by 36%, giving BFX tokens in return. 

The following year the exchange withdrew all the BFX tokens issued to users, repaying them, and thus extinguishing this debt. 

Gli hacker di Bitfinex: la prigione e le accuse mosse dai Fed

In 2022 the federals discovered that behind the hack were Ilya Lichtenstein and his wife Heather Rhiannon Morgan.

In particular, Heather Morgan is now also famous as a rapper, with the name Razzlekhan. 

It is precisely towards Heather Morgan that the federals have issued the request for 18 months in prison. 

In July Morgan was present at the Bitcoin Conference 2024 in Nashville, and in fact, is still at large because the final verdict against them is still pending.

Morgan last year pleaded guilty, but the final sentence is expected only on November 8 of this year. Hence the request from the federals for 18 months in prison.

Instead, the husband Ilya Lichtenstein is under house arrest. 

Initially, Morgan was facing up to 5 years in prison, but the federal authorities requested a more lenient sentence because she provided assistance in the plea deal with her husband. Furthermore, the main role in the hack was played by Lichtenstein, and Morgan later spent only a small fraction of what they had stolen. 

A portion of the stolen funds was used to purchase physical gold coins that were then buried in a secret location, which the two, however, later revealed to the authorities. 

The recovery of the funds

After discovering the authors of the theft, the US authorities also managed to recover part of the stolen funds, even though 6 years passed from the hack to the discovery. 

The recovery occurred between 2022 and 2023, and in theory, they should now be returned to Bitfinex. The same federal authorities have asked the court that the criptovalute seized from the hackers be given to Bitfinex as restitution in kind.

In fact, the exchange paid off all its debt to its users back in 2017, so in theory, nothing is owed to the users themselves. 

In total, approximately 95,000 BTC were seized, to which 117,400 BCH (Bitcoin Cash), 117,400 BSV (Bitcoin Satoshi Vision), and 118,100 BTG (Bitcoin Gold) must be added, for a total value exceeding 6 billion dollars.

Bitfinex is part of the iFinex group, which also includes Tether.