Bitfinex hacker faces 5 years in jail; Will he flip again?

US prosecutors are reportedly pushing for a five-year prison sentence for Ilya Lichtenstein in the case linked to the massive $6 billion Bitfinex exchange hack and money-laundering conspiracy. It is also expected that the hacked exchange might qualify for restitution ahead.

Lichtenstein pleaded guilty last year and is now expected to receive a longer sentence than his co-conspirator and rapper wife, Heather Morgan. Prosecutors recommend that she should get 18 months in prison.

Ilya Lichtenstein’s fate is sealed

According to a report, prosecutors said that Lichtenstein represents a new wave of young cybercriminals, and normalizing their online activities might underplay the victims’ suffering. They suggest that a strong sentence is necessary to prevent future crimes.

Lichtenstein was the primary figure behind the Bitfinex hack. He laundered the stolen funds with Morgan’s help. His wife reportedly got involved in the process even after discovering his involvement in the crime. They used schemes like moving funds through exchanges, buying NFTs, gold, and Walmart gift cards with the stolen crypto.

Despite the hacker’s major role in hacking the exchange and moving funds, the prosecutors are not seeking the maximum jail time for Lichtenstein. They have mentioned his cooperation in other cases, including his testimony in a money-laundering trial regarding Bitcoin Fog. However, the couple is set to face their sentence in November.

Bitfinex may qualify for restitution

A recent court filing showed that Bitfinex might qualify for restitution for the theft of 119,756 Bitcoin back in 2016. The US government is currently unaware of any other parties that are eligible for restitution but is proceeding with caution.

The hacked exchange had tried to reduce the losses by turning down all customer accounts by 36% and issuing a new BFX token to cover the losses. This approach might have impressed the authority.

As per the Crime Victims’ Rights Act, victims can ask for full restitution for their losses while the Mandatory Victim Restitution Act instructs the offenders to reimburse their victims. BFX holders had options to sell tokens on the market or redeem them with Bitfinex at a value of $1 per token. Accredited investors could also exchange tokens for shares in iFinex. All BFX tokens were redeemed within eight months.

Bitcoin was trading at around $570 when the hack happened. As of press time, BTC now trades at an average price of $67,803.