2016 Bitfinex Hack

United States v. Ilya Lichtenstein and Heather Morgan

U.S. District Court for the District of Columbia – Case No. 23-CR-239

Defendants: Ilya Lichtenstein and Heather Morgan

Summary of the Case:

In August 2016, defendant Ilya Lichtenstein hacked into a virtual currency exchange named Bitfinex and stole approximately 120,000 bitcoin. Following the theft, Defendant Lichtenstein devised a sophisticated plan to launder the stolen funds, involving extensive layering of transactions, cryptocurrency mixers and non-compliant cryptocurrency exchanges, darknet markets, and bank accounts in the U.S., as well as overseas. Defendant Lichtenstein enlisted the assistance of his wife, co-defendant Heather Rhiannon Morgan, to clean the money. Defendant Lichtenstein and Defendant Morgan continued to conspire to launder the funds until February 2022, when federal law enforcement placed them under arrest for being involved in a money laundering conspiracy, in violation of 18 U.S.C. § 1956(h), and a conspiracy to defraud the United States, in violation of 18 U.S.C. § 371. 

Information Regarding the Defendant Lichtenstein’s Plea and Pending Sentencing Hearing:

On August 3, 2023, Defendant Lichtenstein pleaded guilty to one count of Money Laundering Conspiracy, in violation of 18 U.S.C. § 1956(h). Defendant Lichtenstein is scheduled to be sentenced on November 14, 2024, at 2:00 p.m., in Courtroom 28A, before Judge Colleen Kollar-Kotelly.

Information Regarding the Defendant Morgan’s Plea and Pending Sentencing Hearing:

On August 3, 2023, Defendant Morgan pleaded guilty to one count of Money Laundering Conspiracy, in violation of 18 U.S.C. § 371 and § 1956(a)(1)(B)(i), and one count of Conspiracy to Defraud the United States, in violation of 18 U.S.C. § 371. Defendant Morgan is scheduled to be sentenced on November 15, 2024, at 2:00 p.m., in Courtroom 28A, before Judge Colleen Kollar-Kotelly.

Notice to Persons Impacted by the Defendants’ Conduct – Soliciting Impact Statements

As authorized by the U.S. District Court (link to Oct. 10, 2024 PDF opinion here), the United States provides this notice to the public out of an abundance of caution to solicit and receive information from all persons potentially harmed by the defendants’ conduct, including affected accountholders at the Bitfinex virtual currency exchange. The United States welcomes any statements and arguments from such persons, including statements relevant to the Court’s sentencing of the defendant, such as how they have been impacted by the defendants’ conduct.  

If you wish to complete a statement about the impact of the offense on you and/or to relay information about how you may have been victimized, please send that statement to the United States to be conveyed to the U.S. District Court judge who will make decisions in the case, including by sentencing the defendants. Specifically, please submit a statement by no later than November 12, 2024, via email to USADC.BitfinexHack2016@usdoj.gov.  As stated above, the sentencings are currently scheduled for November 14 and 15, 2024.  

To be clear, because the defendants’ offenses of conviction are 18 U.S.C. § 1956(h) (Money Laundering Conspiracy) and 18 U.S.C. § 371 (Conspiracy to Defraud the United States), according to the government, such individuals are not “victims” under the Crime Victims’ Rights Act (CVRA), 18 U.S.C. § 3771, or for restitution purposes. However, such persons are free to argue otherwise to the Court and to seek the benefit of all rights under the CVRA, which are enumerated here. To summarize, victims of a crime under the CVRA have the following rights:

1. The right to be reasonably protected from the accused;

2. The right to reasonable, accurate, and timely notice of any public court proceeding, or any parole proceeding, involving the crime or of any release or escape of the accused;

3. The right not to be excluded from any such public court proceeding, unless the court, after receiving clear and convincing evidence, determines that testimony by the victim would be materially altered if the victim heard other testimony at that proceeding;

4. The right to be reasonably heard at any public proceeding in the district court involving release, plea, sentencing, or any parole proceeding;

5. The reasonable right to confer with the attorney for the government in the case;

6. The right to full and timely restitution as provided in law;

7. The right to proceedings free from unreasonable delay;

8. The right to be treated with fairness and with respect for the victim’s dignity and privacy;

9. The right to be informed in a timely manner of any plea bargain or deferred prosecution agreement; and

10. The right to be informed of the rights under this section and the services described in section 503(c) of the Victims’Rights and Restitution Act of 1990 (34 U.S.C. § 20141(c)) and provided contact information for the Office of the Victims’ Rights Ombudsman of the Department of Justice. The Victims’ Rights Ombudsman may be contacted at eousa.VictimOmbudsman@usdoj.gov if a victim believes a Department of Justice employee has failed to provide them their rights under the Crime Victims’ Rights Act.