Lichtenstein and his wife, Heather Morgan, used complex and sophisticated techniques to launder a large portion of the stolen Bitcoins. This incident included Lichtenstein being sentenced to five years in prison and Morgan being sentenced to 18 months in prison, according to a statement by the U.S. Department of Justice.

Ilya Lichtenstein stole 119,754 bitcoins by hacking the Bitfinex exchange network in 2016. Using advanced hacking tools and techniques, he infiltrated the exchange’s system and transferred large amounts of bitcoin to his own wallet, making more than 2,000 transactions.

After the hack, Lichtenstein attempted to prevent police and security forces from tracking him by deleting Bitfinex’s network access information and other log files to hide his tracks. However, tracking the stolen bitcoins and laundering them was a very complicated process.

Lichtenstein and Morgan laundered 25,111 bitcoins, approximately 21% of the 120,000 stolen bitcoins, through various methods. The couple carried out these transactions through Eastern European bank accounts and bitcoin mixing services.

They also aimed to anonymize transactions by depositing stolen funds into various cryptocurrency exchanges and then withdrawing them, converting Bitcoins into other cryptocurrencies.

In this process, they converted Bitcoins into different cryptocurrencies through a method called “chain hopping” and thus gained more anonymity. They also tried to hide the traces of these money by converting some of the proceeds of crime into gold coins.

However, despite his sophisticated money laundering methods, cybercrime veteran Brett Johnson criticized some of Lichtenstein’s laundering methods.

Johnson stated that Lichtenstein acted irrationally in the money laundering process by linking Coinbase accounts directly to him. Johnson stated that Lichtenstein was inexperienced in laundering and therefore they could not manage the process correctly.

Lichtenstein and Morgan were initially investigated only on charges of money laundering, but Lichtenstein revealed himself as the hacker. Both were not held responsible for the Bitfinex hack, but pleaded guilty to money laundering charges in 2023.

On August 3, 2023, they both pleaded guilty to money laundering by conspiracy. This crime is punishable by 20 years in prison. Lichtenstein was ordered to receive three years of supervised release in addition to the five-year prison sentence requested by prosecutors.

This case was an important turning point in the cryptocurrency industry. Because, with the increasing interest in Bitcoin and other cryptocurrencies, such cyber crimes and money laundering methods are expected to become more complex.

However, Lichtenstein and Morgan’s case shows that money laundering methods in the crypto world still make easy targets and can be followed.