A hacker reportedly breached a crypto wallet likely controlled by the U.S. government, siphoning off $20 million in seized funds, according to on-chain analytics firm Arkham Intelligence. These funds, tied to the infamous 2016 Bitfinex hack, were moved to an address starting with “0x348.” The hacker has allegedly begun converting the stolen assets, including USD Coin (USDC), into Ethereum (ETH) and is laundering the funds through suspected money-laundering services.
U.S. Government Wallet Targeted
The compromised wallet contained cryptocurrency assets previously seized by U.S. authorities as part of their recovery of funds from the 2016 Bitfinex hack. The hack was carried out by Ilya Lichtenstein and his wife Heather Morgan, who were arrested in 2022 after years of investigation. Their sentencing is scheduled for November 2024.
Arkham Intelligence has revealed that the hacker currently holds about $13 million in remaining assets and is likely using sophisticated methods to obscure the trail of the stolen funds. The attacker’s swift moves to convert stablecoins into ETH and funnel them through suspect addresses have raised concerns about the security of government-controlled crypto assets.
The 2016 Bitfinex Hack and Legal Aftermath
In 2016, Lichtenstein and Morgan stole 120,000 Bitcoin from the Bitfinex exchange, a sum now worth around $8.2 billion. This was one of the largest crypto heists in history, and U.S. authorities seized the stolen assets in what was then the biggest digital asset recovery by the Department of Justice. The couple admitted to laundering the stolen Bitcoin and defrauding the U.S. government. In a plea deal reached in July 2023, both accepted lighter sentences in exchange for their cooperation.
U.S. prosecutors recommended an 18-month prison term for Morgan, citing her lower-level involvement and cooperation with law enforcement. Lichtenstein, however, faces a recommended five-year sentence for orchestrating the hack, a significant reduction from the initial 20-year sentence prosecutors sought. His cooperation with authorities and lack of prior criminal history contributed to this reduced recommendation.
