Hacker Moves $20M in Crypto from US Government’s Bitfinex Wallet

An alarming $20 million in cryptocurrency associated with U.S. government addresses has been transferred to a new wallet, prompting concerns about a possible theft.

The transactions came from the government-controlled Bitfinex Hack Wallet, which contained a portion of the funds retrieved following the 2016 hack of the Bitfinex crypto exchange, leading to the loss of nearly 120,000 BTC.

Questionable Fund Transfers

Blockchain security firm Arkham Intelligence was one of the first to identify the suspicious activity, initially pointing fingers at government officials for moving the assets.

The suspected hacker extracted crypto valued at around $5.4 million from the Aave lending platform, transferring it to a newly created address just five days prior. Following that, another $1.12 million in USDT was withdrawn, marking the first activity from this address in eight months.

However, it was only after the wallet began transferring tokens to another address, starting with “0x348,” which had been previously associated with money laundering, that Arkham began monitoring the fund movements, ultimately determining that it was indeed an exploit.

In addition to the earlier withdrawals, the alleged thief also transferred an extra $446,000 in Ethereum (ETH) and $13.7 million in aUSDC, a version of the USD Coin that earns interest and was deposited on Aave. The Bitfinex Hack Wallet received millions of this specific cryptocurrency in 2022, along with its USDT counterpart.

The suspect has begun to move some of the stolen assets to instant exchanges, which are platforms that enable users to swiftly swap one cryptocurrency for another without needing to create an account or go through a prolonged verification process.

The majority of blockchain security experts have concurred that the transfers were suspect, with ZachXBT noting that any funds transferred to instant exchanges were “nefarious.”

Overview of the Bitfinex Hack

The Bitfinex hack ranks among the largest in the history of cryptocurrency. The culprits, now known as Ilya Lichtenstein and his spouse Heather Morgan, stole 119,754 BTC, valued at approximately $71.8 million at the time.

The couple was arrested in February 2022 and subsequently pleaded guilty to money laundering and fraud. At the time of their arrest, the stolen assets were worth over $4.5 billion in the market.

Lichtenstein received a five-year prison sentence for his involvement in the hack and subsequent money laundering operations. His brief sentence was a result of his cooperation with authorities in other investigations, including serving as a state witness against Roman Sterlingov, the founder of the Bitcoin Fog crypto mixing platform.

Meanwhile, Morgan, who is also recognized by her rap name “Razzlekhan,” was sentenced to 18 months in prison and is currently free after serving her sentence.

Law enforcement agencies successfully recovered approximately $3.6 billion worth of Bitcoin stolen during the Bitfinex incident, with some of it being returned to the exchange.