US government crypto wallets hacked for $20M — Arkham Intelligence

On Oct. 24, a hacker compromised a wallet likely controlled by the United States government. The wallet, which included funds seized from the 2016 Bitfinex hack, was drained of $20 million.

According to Arkham Intelligence, the attacker sent the funds to a wallet beginning with “0x348,” which included US Dollar Coin ( USDC ), Tether ( USDT ), aUSDC, and Ether ( ETH ).

The onchain analytics firm also believes the hacker has started converting the stablecoins into ETH and laundering the funds through addresses likely associated with a money laundering service.

The attacker exploited funds seized by the US government in the 2016 Bitfinex hack, whose perpetrators—Ilya Lichtenstein and his wife Heather Morgan—face sentencing in November.

Related: Only Bitfinex may get restitution in 2016 hack, per government filing

The 2016 Bitfinex hack

Lichtenstein and Morgan hacked the Bitfinex exchange in 2016 and stole 120,000 Bitcoin ( BTC ), valued at approximately $8.2 billion at current market prices. The pair was later arrested by US authorities in 2022 .

Law enforcement officials also seized the stolen crypto assets, which represented the largest digital asset seizure by the United States Department of Justice at the time.

The couple pleaded guilty to charges of money laundering and conspiracy to defraud the US government in a July 2023 plea agreement with prosecutors, in exchange for lighter sentencing. At first, Lichtenstein admitted to laundering the funds but later revealed himself to be the hacker as well.

In an Oct. 9 filing, US prosecutors argued that Morgan should receive a lighter sentence of 18 months in prison due to her earlier cooperation with law enforcement. She was also deemed a “lower level” participant in the scheme and did not spend significant portions of the stolen funds.

Using this same rationale, prosecutors recommended a five-year sentence for Lichtenstein for his role in orchestrating the hack and stealing 120,000 BTC. This five-year recommendation is a drastic reduction from the 20-year prison sentence initially sought by prosecutors.

In the Oct. 15 court filing, prosecutors noted Lichtenstein’s cooperation with investigators and a lack of prior criminal history as reasons for a reduced sentence.

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