US Government Loses $20M in Seized Assets After Suspected Hack

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More than $20 million in seized stablecoins and Ethereum have been moved from a wallet associated with the US government, an action deemed as theft.

According to on-chain analytics company Arkham Intelligence, the assailant redirected funds connected to the 2016 Bitfinex hack to a newly created wallet address.

“$20M in USDC, USDT, aUSDC, and ETH has been suspiciously transferred from a USG-linked account,” it stated in a post on Oct. 24 post on X.

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Hacker Begins Laundering Government Funds Across Multiple Platforms

Immediately after the funds were transferred from the government wallet, the hacker started exchanging the stablecoins into ETH via addresses presumably related to a money-laundering operation, as noted by Arkham Intelligence.

moving funds to instant exchanges appears suspicious

— ZachXBT (@zachxbt) October 24, 2024

Analyst ZachXBT indicated that certain funds were also shifted to instant exchanges, with one platform obtaining its liquidity from Binance, the leading centralized crypto exchange.

US Government Seized Assets from the 2016 Bitfinex Hack

The assets involved in these transactions were confiscated by the US government during the 2016 Bitfinex hack. Perpetrators Ilya Lichtenstein and Heather Morgan are set to be sentenced next month.

In the 2016 incident, Lichtenstein stole 120,000 Bitcoin. Years later, the couple was arrested by US authorities, which led to the seizure of the stolen assets, including USD Coin (USDC), Tether (USDT), aUSDC, and Ethereum (ETH).

The duo pleaded guilty to charges of money laundering and conspiracy to defraud the US government in 2023, as part of a plea agreement for a lesser sentence.

In a filing dated Oct. 9, prosecutors contended that Morgan’s collaboration with law enforcement warranted a lighter sentence of 18 months in prison. She was also categorized as a “lower level” participant in the Bitfinex hack and did not utilize a significant portion of the stolen funds.

Prosecutors applied the same reasoning to advocate for a 5-year term for Lichtenstein, who orchestrated the hack. His willingness to cooperate with investigators and absence of a criminal record were also cited as justifications for a reduced sentence. Initially, prosecutors had sought a 20-year prison term.

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