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DoJ seized bitcoins worth 3.6 billion dollars – what can we learn from this case?

DoJ seized bitcoins worth 3.6 billion dollars – what can we learn from this case

While many still consider cryptocurrencies to be like a financial “Wild West,” the truth is that this sector is one of the most transparent due to blockchain technology and many on-chain analytics companies. That was proved once again a few days ago, when the Bitfinex hack saga finally reached its end.

Main information about the hack

The Bitfinex hack occurred in August 2016, when unknown hackers got their hands on almost 120 000 BTC. At the time of the hack, this was worth around 72 million dollars, with the currently seized value being over 3.6 billion dollars. Until recently, there was no news about the hackers or the whereabouts of the stolen bitcoins. However, as was announced recently by the US Department of Justice (DoJ), the identity of the hackers has been revealed, while almost 94 600 BTC has been confiscated and are in the hands of DoJ.

The seized bitcoins account for one of the most significant financial seizures in history. The DoJ was able to trace back almost 25 000 BTC to Heather Morgan and her husband, Ilya Lichtenstein, which they tried to launder through different tools such as vouchers, Coinjoin, or darknet tools.

Due to their activities and the nature of Bitcoin, DoJ was able to track the accounts and addresses that were responsible for the hack. So who are the hackers?

Who are the hackers?

Ilya Lichtenstein was born in Russia and has spent most of his life in the US. He was a founder of MixRank, a company focusing on customer discovery helping the sales teams worldwide. While his background seems interesting, Heather Morgan gained much more attention after the seizure.

Heather Morgan is also known as Razzlekhan, which is her stage name. Due to her online presence on platforms such as TikTok or Twitter, she has created a community of followers with whom she shared her thoughts. Some of them were often connected to cryptocurrencies themselves, but their message was at least disturbing, considering her actions.

While the actions of these two people are going to be judged in front of the court, there are already a few conclusions and takeaways that anyone can take from this case.

1. Cryptocurrencies are not anonymous

While some of the cryptocurrencies are ensuring that their privacy settings and anonymity are an absolute key, most of the cryptocurrencies are not anonymous. Bitcoin, for instance, is pseudonymous, meaning that the address can be traced back to the individual if they use any KYC tools and thus investing in it does not mean that you are anonymous.

Today’s arrests and the department´ s largest financial seizure ever show that cryptocurrency is not a safe haven for criminals.
Lisa Monaco, Deputy Attorney General

Those were the words of Lisa Monaco, Deputy Attorney General. She also pointed out that the hackers tried to use several different tools to launder the money. Still, they were able to catch them thanks to the work of the law enforcement.

In combination with various companies, such as Chainalysis, that are tracking the overall space and blockchains, it is ever more difficult to “stay off the grid” in case anyone would want to use the cryptocurrencies for anything illegal. Obviously, this is good news for crypto since this space has been accused many times of being “criminal-friendly.” As this arrest showed, this is no longer the case.

2. Being cryptorich means nothing

Many people have joined the cryptocurrency space with one vision – getting rich quickly. Some of them might not even care about whether they do it legally or morally right. While that might have been possible initially, the whole sector has evolved. With the emergence of blockchain analytic companies, illegal activities are under ever-more supervision, and the hackers have harder and harder times trying to turn their “virtual profits” from hacks into money.

This case is one of the best examples of that. While on paper, Heather Morgan and Ilya Lichtenstein were sitting on nearly 5 billion dollars combined, they were not able to do anything with them without blockchain analytical companies and government institutions finding it out.

3. Not your keys, not your bitcoins

Having your private keys stored safely is one of the most essential rules in the cryptocurrency world. While it was not so easy to store cryptocurrencies safely back in 2016 when the hack occurred, today there are several safe options for anyone. Ledger and Trezor offer safe and secure devices that let you be in charge of your cryptocurrencies.

Thus, in the event of a hack just like the Bitfinex 2016 hack, the hackers will not be able to steal your cryptocurrencies since they will be safely stored offline on your hardware wallet device. The saying “Not your keys, not your bitcoins,” that is very popular in the cryptospace, is still very true, and everyone should keep it in mind.

Conclusion

The Bitfinex hack thus can have a bit of a bitter-sweet taste. While the bigger portion of stolen funds might be returned to its holders, the DoJ was not able to seize all of the stolen bitcoins.

Nevertheless, even this case has the ability to teach people more about cryptocurrencies, which is something that we are trying to do every day in CRYPTO INVESTMENT. If that is not enough for you and you have any questions, please do feel free to contact us here.

Published: 11. March 2022
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