In the trial involving money laundering in Washington, Ilya Liechtenstein, who confessed to orchestrating one of the largest Bitcoin thefts in Bitfinex crypto accounts, provided detailed information about his crime as a witness cooperating with the US government. Liechtenstein admitted that he had accessed Bitfinex systems for several months and hacked accounts on other cryptocurrency exchanges such as Coinbase and Kraken. Along with his wife, a well-known rapper on social media, he confessed to conspiracy to launder money related to Bitfinex last year.
During his testimony, Liechtenstein revealed that he used the Bitcoin FOG cryptomyxer up to 10 times to launder a portion of the stolen funds. The US prosecutor’s office has accused Roman Sterlingov, whom they claim managed the mixer, of facilitating the laundering of tens of millions of dollars from drug trafficking on dark markets. Sterlingov’s lawyer argues that there is no concrete evidence linking him to the management of the mixer.
Liechtenstein’s testimony shed light on the motives behind the 2016 Bitfinex hack and the laundering methods used for millions of dollars. He explained to the jury that he decided to hack the exchange due to issues with his startup in San Francisco, stating, “At that time, my business was experiencing difficulties, and I felt very burnt out because of this.”
At the time of the couple’s arrest, the US government alleged that they attempted to launder $4.5 billion in stolen bitcoins, of which they successfully seized $3.6 billion, marking the largest financial seizure in history. Subsequently, nearly $1 billion linked to the Bitfinex hack was recovered.
After gaining access to Bitfinex, Liechtenstein devised a method to save customer passwords for accessing accounts on other exchanges. He admitted to using various mixers, including Bitcoin Fog, to obscure the origins of the stolen funds, although only a small portion of the funds were laundered through such platforms. In some instances, Liechtenstein invested the money in cryptocurrency exchanges using accounts he acquired from the darknet. Some of the stolen funds were used to purchase NFTs, gold, and Walmart gift cards.
Liechtenstein mentioned that he eventually ceased using Bitcoin Fog and switched to other mixers that better aligned with his objectives, one of them being Helix controlled by Larry Harmony, who pled guilty in 2021.
During questioning from Sterlingov’s lawyer, Liechtenstein clarified that he did not personally know Sterlingov or engage in any conversations with him. The lawyer also inquired about Liechtenstein’s drug use