United States prosecutors have recommended a five-year prison sentence for Ilya Lichtenstein, who admitted to masterminding the 2016 Bitfinex hack.
Prosecutors told a Washington, D.C. federal court on Oct. 15 that Lichtenstein should receive a lesser sentence than the 20 years initially proposed, considering his cooperation and lack of prior criminal history.
Lichtenstein pleaded guilty to laundering Bitcoin stolen from the Bitfinex exchange, with prosecutors highlighting that his assistance has been “beneficial to numerous investigations.”
However, they argued that Lichtenstein deserves a longer sentence than his wife, Heather Morgan, due to the seriousness of his role in planning the hack.
Both Lichtenstein and Morgan were involved in laundering the stolen Bitcoin, although their roles in the scheme differed.
While Lichtenstein laundered only a portion of the 120,000 stolen Bitcoin, he had spent months planning the attack and experimenting with other cybercriminal activities.
Prosecutors also revealed that Lichtenstein had stolen $200,000 from another cryptocurrency exchange during this period.
The court filing stated that his actions warrant a “substantial” sentence to deter future crimes of a similar nature.
According to the prosecutors, “it was law enforcement intervention — not any sort of spontaneous remorse” that led to the recovery of the stolen funds.
On the other hand, Morgan faces a significantly lighter sentence.
Prosecutors have requested that she serve 18 months in jail due to her cooperation in the investigation.
Morgan, who pleaded guilty to money laundering charges, was described as playing a smaller role in the operation, only discovering the details of the hack after it took place.
Her sentencing is scheduled for Nov. 15, a day after Lichtenstein’s.
In addition to the prison sentences, prosecutors are seeking an order for the return of the crypto assets seized from Lichtenstein’s wallet.
These assets include around 95,000 Bitcoin, 117,400 Bitcoin Cash, 117,400 Bitcoin Satoshi Vision (BSV), and 118,100 Bitcoin Gold, worth over $6 billion.
The prosecutors want the funds returned to Bitfinex as part of in-kind restitution.
Bitfinex hack: a multi-year case
Legal proceedings surrounding Lichtenstein and Morgan’s case have been ongoing since they were arrested in February 2022.
At the time, they were accused of laundering proceeds from the Bitfinex hack., however, Lichtenstein later admitted to being the hacker behind the operation.
During the same month, US authorities managed to seize around 94,643 Bitcoin from them, valued at $3.6 billion at the time.
Following the hack, Bitfinex compensated affected users by issuing BFX tokens. These tokens could later be redeemed or converted into equity shares of the exchange’s parent company, iFinex.
By April 2017, Bitfinex had redeemed all outstanding BFX tokens, fulfilling its commitment to user recovery.
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