In a shocking turn of events, Ilya Lichtenstein, the infamous hacker behind the 2016 theft of 120,000 Bitcoin from crypto exchange Bitfinex, has become a cooperating witness for the U.S. government.
Appearing in a Washington court on Tuesday, Lichtenstein gave a detailed account of how he gained access to Bitfinex’s systems and stole billions in Bitcoin over several months. The 36-year-old, who said financial struggles with his tech startup motivated the heist, also admitted to hacking into other exchanges like Kraken and Coinbase.
After the theft, Lichtenstein used a laundering service called Bitcoin Fog to obscure the stolen funds before depositing them into exchanges through accounts purchased on the darknet. While only $3.6 billion of the loot was recovered in what became the largest government seizure in history, Lichtenstein’s testimony signals a new strategy by the U.S. to tackle crypto crime by flipping hackers into informants.
The government’s BTC reserves continue to grow through such seizures, even as the fate of the remaining stolen bitcoin from Bitfinex remains uncertain. Nonetheless, Lichtenstein’s transition from an indicted hacker to a cooperating witness is a major twist that few saw coming.
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