Couple admit they laundered $4B in stolen Bitcoins after Bitfinex super-heist Ilya Lichtenstein and Heather Morgan on Thursday pleaded guilty to money-laundering charges related to the 2016 theft of some 120,000 Bitcoins from Hong Kong-based Bitfinex. The Feds arrested Lichtenstein, 35, and Morgan, 33, in February 2022 following the US government's tracing of about 95,000 of the stolen BTC – worth about …
He set up fraudulent transfers, attempted to launder the money and bought gold. Which he buried, like a true pirate.
He never would have been able to do any of that with a regular bank. Why ? Because banks are all signed up to the financial charter which is a stickler for security of funds. Under the charter, banks are forced to have internal tools of surveillance. Fund transfers don't ever just come out of the blue.
If those funny money platforms were signed up to banking charter - which they should be - then this would not have been possible.
So, if everyone agrees to keep this stupid crime-facilitating scheme (which I most definitely do not), then at least let's get them signed up to true responsibility.
This guy wasn't sticking it to The Man, he was in it for the gold. That should be harder to do.
But that sort of thing costs money!!! And the banks are on the hook if things still go wrong!!! We cant have any of that, in the Wild, wild, crypto West... For reasons of freedom, and sticking it to the man, and decentralisation, and.... oh look a monkey picture....
What we're we talking about again...?
In this article..."the US government's tracing of about 95,000 of the stolen BTC....Justice Department ... described the seizure as the largest ever..."
But we have all been told...."Cryptocurrency has to be outlawed because criminals use it anonymously to do their crimes!"
With conflicting reporting like this, it is no wonder most people don't understand cryptocurrency. If we went back in the time machine a couple years to borrow a catch-phrase, one of these statements would be classified as "misinformation".
The world is more nuanced than black and white so both statements can be true and neither is misinformation or conflicting reporting.
Crypto currency transactions are anonymous provided no one knows your wallet address.
But, if your wallet is known then every transaction is out there on the public blockchain making it possible to trace where it came from.
That is why the IRS is asking:
“At any time during 2022, did you (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
Easiest way to launder money is cash. A big favorite is to go to Walmart and trade the ill gotten gains for digital currency. (Gift cards)
“I don't think Walmart has 4,8 billion dollars worth of anything that I want”
Thanks. Your comment made me smile.
I was referring to the prepaid cards that you can buy that can be used anywhere credit cards are accepted. But yep, 4.8 would raise a bit of a notice.
Pascal: "He never would have been able to do any of that with a regular bank. Why ? Because banks are all signed up to the financial charter which is a stickler for security of funds. Under the charter, banks are forced to have internal tools of surveillance. Fund transfers don't ever just come out of the blue."
Errrm, so matey, how exactly did the crooks launder £4.7 beeeeellion through the British banking system during the Great Covid Giveaway? Or get away with over a billion quid of APP fraud every year? If I want to open a piddly savings account, the b*****ds of the banking system want utterly unreasonable levels of proof as to who I am. When it comes to laundering crooked cash it's pretty obvious that the system was setup to enable it.
I'm well aware that corporations steal $55 billion of workers' wages every year, $8 billion just off minimum wage workers in 10 states (https://www.courts.ca.gov/opinions/links/S241812-LINK1.PDF). $4 billion off of people who use crypto is very little skin off my back.
I don't agree with you in any way, but even under your terms, they didn't hit the level you required. As the article said:
In case you're wondering, 120,000 BTC in August 2016, when Bitfinex was ransacked, was worth about $70 million;
Cocaine is illegal to possess or to transfer. Bitcoin is not. See the difference? Now you might have Bitcoin for an illegal reason, and in that case going to the police to recover it would be a bad idea, just as it is a bad idea for drug gangs to report to the police about stolen cash. However, if you own it legally, which this company did, then there is no reason for the police not to investigate the theft. That principle works as long as the thing that was stolen is legal to have, no matter what that thing may be.
Bitcoin as the geriatric senior of the web 3 world, lacks contracts. So there is that.
As to the implication they should stop whining if the self enforced rules don't work as intended (or were built by hucksters and work exactly as intended, just not as advertised..) the crypto-bros lack of concern for the actual laws doesn't make them go away, just like law enforcement can't wish cryptocurrencies away.
So if you have been screwed over, why not avail yourself of both? Though in reality, like most scams, the majority of the money will have been wasted by the thieves before anyone can claw back the remains, if you are lucky enough to do so.
Instead the main service a modern "justice" system offers is the cold comfort of knowing the persons who screwed you over have themselves been screwed savagely by the government at the expense of the taxpayers. It's not a great system, but it's still cheaper than hiring enforcers on the dark web I guess.
Then again the banks and insurance companies have screwed me out of way more money than I have ever lost on crypto, and I can't even have them arrested. Definitely the best time line.
What happened to them is that both of them were and are bollocks. The code was never law. The people who said it was were either trying not to bother doing anything about crimes and/or planning their own crimes. Others said it to indicate that legal solutions can't always deal with technical realities, for example if cryptocurrency is stolen it may not be possible to retrieve it just because the police say it should. Either way, the law never agreed to just let the code handle things.
As for self-enforcing contracts, those were never what proponents claimed they were. They had lots of ideas of how you could make those into, effectively, automated lawyers who could check on the real world and take actions accordingly. What you could actually do with them was build more cryptocurrency-like assets on top of existing ones, with various bugs that people weren't always great at removing before making them live. Sometimes, people found a way to use that, but it was never what people claimed it to be. Neither changes any of the legalities about cryptocurrency, like the thing being legal and stealing it being illegal, so they also have no effect on what law enforcement chooses to do.
Thanks to the author to give me the envy to listen to the "Live at Shea Stadium" album again.
I have to say that Morgan's reinvention of herself as Razzlekhan is one of the more interesting things to happen when a nerdy person like ourselves gets money. Stealing is wrong, but using the money for something badass like being a female rapper with really weird tracks is truly a boss move
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Looks like Razzlekhan is going to be the crocodile of cell block B, at least for a while. Lichtenstein may have stolen a bunch of Crypto, but at least he had the good sense to not rap badly online about it. I'm genuinely surprised it took this long, these two have acted like giant idiots the whole time. I think lack of technical competence from authorities is the reason but they could have just been trying to tie in more co-conspirators.
These criminals may have stood a better chance of staying out of jail had they dumped their ill-gotten gains into one or more newly created Bitcoin addresses and left them completely untouched for more than five years. That is, no attempts to launder the stash(es) through a cascade of addresses. The newly created addresses should be via a standalone full Bitcoin node, one preferably unconnected with their IP addresses and ditched immediately the contents of the new addresses were confirmed.
Although the new accounts would be flagged by law enforcement, passage of time would reduce interest in the case and other more urgent priorities would have arisen. After the dormancy, the crooks could have obfuscated further enquiries by sending varying small amounts of coinage to many addresses known to be associated with other people and institutions. Larger tranches would go to addresses in places not co-operative with US agencies or in nations notorious for corruption (e.g. Ukraine and Nigeria) to suggest those as the criminals' locations.
Thereupon, the criminals could begin using some of the stolen coinage for transactions not entailing banks.
If the forgoing was their intent, fear of Bitccoin's value crashing may have led to fatal urgency.
In retrospect, these criminals could have used their talents better in honest endeavour, or at least in less high profile wrongdoing.
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