Pair charged in $3.6B hack; how secure is your crypto?

Posted: 9 February 2022 6:27 pm
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Crypto crime rose 79% in 2021 and took a staggering $14 billion in wealth. Plus: Tips on protecting yourself.

Feds have seized $3.6 billion in allegedly stolen cryptocurrency and charged two individuals in the 2016 hack of virtual currency exchange Bitfinex.

The price of Unus Sed Leo (LEO), the cryptocurrency designed to be used on the Bitfinex exchange, surged more than 50% on the news.

This again raises the question, just how safe is your crypto? After all, crypto crime rose 79% in 2021 and took a staggering $14 billion in wealth. Crypto crime hasn’t grown as quickly as crypto use, but those are still large numbers.

Here’s what’s developing with the Bitfinex hack and what you can do to secure your crypto.

Feds seize $3.6B in stolen crypto tied to 2016 Bitfinex hack and arrest two

The Justice Department announced Tuesday that it had arrested a New York couple on allegations they planned to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex. Law enforcement has recovered over $3.6 billion in crypto linked to that hack. The total value of crypto stolen in 2016 is said to be worth approximately $4.5 billion at present value.

It marks the department’s largest financial seizure ever, Deputy Attorney General Lisa Monaco said in a statement.

Justice Department officials said they arrested Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31. Both were scheduled to make their initial appearances in federal court Tuesday.

Court documents show that the couple allegedly conspired to launder the proceeds of 119,754 Bitcoin stolen from Bitfinex’s platform after a hacker breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions. Prosecutors allege that the transactions sent the stolen Bitcoin to Lichtenstein’s digital wallet.

Authorities said approximately 25,000 of those stolen Bitcoin were transferred out of Lichtenstein’s wallet over the last five years through a complicated money laundering process, which ended with some of the stolen funds being deposited into the couple’s bank accounts.

After lawfully gaining access to an online account controlled by Lichtenstein and Morgan, agents found the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex. The agents were able to seize more than 94,000 Bitcoin, which was valued at around $3.6 billion at the time of seizure.

“Today, federal law enforcement demonstrates once again that we can follow money through the blockchain and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” said Assistant Attorney General Kenneth Polite Jr. in a statement.

The couple is charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and conspiracy to defraud the United States, which carries a maximum sentence of five years in prison.

How to secure your crypto

Crypto is complicated and can be confusing, which makes it a target for scammers. Here are some ways to protect your digital assets from theft and hacks.

  • Use a cold wallet. A cold wallet is a physical cryptocurrency wallet that isn’t connected to the internet. The wallet, often a USB stick, stores your address and private key and works together with compatible software on your computer for safe transactions.
  • Secure your internet when making crypto transactions. Avoid public Wi-Fi when buying or selling crypto. Even when you’re home, consider using a virtual private network (VPN) to mask your IP address and location for additional security.
  • Secure your personal devices. Keep the software on your computer or smartphone up to date. Use strong antivirus and firewall protection to improve your devices’ security.
  • Look out for phishing scams. Phishing scams are nothing new, but they’re pervasive in the crypto world. Avoid any suspicious emails or unknown links and never disclose your private key.

Read more in our guide to avoiding cryptocurrency scams.

At the time of publication, Matt Miczulski did not own any crypto mentioned in this story.

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