U.S. Prosecutors Seek 5-Year Sentence for Ilya Lichtenstein

U.S. prosecutors are advocating for Ilya Lichtenstein to receive a 60-month (five-year) prison sentence followed by three years of supervised release due to money laundering charges connected to the 2016 Bitfinex hack.

Despite prior cybercriminal activities, the government is pursuing a lighter sentence than the advisory guidelines of 121-151 months, citing Lichtenstein's cooperation in this case and his assistance in other investigations. His testimony against the operator of the crypto mixer Bitcoin Fog during a trial earlier this year played a part in this request.

Lichtenstein is likely to serve significantly more time than his wife and accomplice, Heather Morgan, who faces a recommended 18-month sentence because of her lesser role in the money laundering activities following the attack. She only discovered Lichtenstein's involvement after the fact.

Prosecutors argue that a strong sentence would help break the cycle of young cybercriminals, stating that these individuals often feel isolated and are normalizing criminal activities in online communities, trivializing the impact on victims.

The Bitfinex Hack Victims

Lichtenstein and Morgan pleaded guilty in August 2023 to money laundering conspiracy charges regarding the 2016 breach, allegedly laundering 119,754 BTC, worth around $70 million at the time and nearly $8 billion today. They were arrested in 2022.

The U.S. Justice Department’s largest financial seizure was connected to their case. A forfeiture money judgment of $72.6 million has been agreed upon, but the value of the seized assets is expected to surpass this total. Lichtenstein has consented to forfeiting substantial assets associated with the hack, including around 94,643 BTC, valued at over $6 billion at current prices, as restitution to Bitfinex.

Last week, it was mentioned that Bitfinex could be the only remaining victim of the 2016 hack. In response to solvency issues after the breach, Bitfinex restructured its operations and allowed customers holding BFX tokens to redeem them fully by April 3, 2017.

To safeguard against any potential claims from Bitfinex account holders, the government requested permission for them to submit claims before sentencing.

Lichtenstein’s sentencing is set for November 14, with Morgan's scheduled for the following day.