Crypto No Longer a Safe Haven for Criminals

DOJ arrested a duo linked to a 2016 crypto exchange hack and has seized $3.6 billion in crypto assets.

Digital Anonymity is Futile

The US Department of Justice (DOJ) announced on Tuesday that they have successfully secured $3.6 billion worth of crypto assets from Ilya Lichtenstein and his wife, Heather Morgan demonstrating that cryptocurrency transactions are not shrouded in anonymity.  ‍

‘Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,’ said Deputy Attorney General Lisa O. Monaco.

The announcement by the DOJ dispels the myth that cryptocurrency transactions are commonly used by criminals to hide their tracks. Instead, it reinforces the fact that blockchain technology is transparent and it also preserves transaction records.‍

‘Today, federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,’ said Assistant Attorney General Kenneth A. Polite Jr.  

Bitfinex was hacked in 2016 and 2,000 unauthorized transactions were initiated. 119,754 Bitcoins were stolen and were sent to a digital wallet under Lichtenstein’s control. The stolen Bitcoins were laundered in a complicated labyrinth of transactions and were traced to financial accounts held by Lichtenstein and Morgan. 

Money Trail

The duo used sophisticated money laundering techniques to remain anonymous. They set up fictatious identities online, utilize computer programs to automate transactions, and deposit the stolen funds into various virtual currency exchanges before withdrawing the funds. 

The DOJ obtained search warrants of online accounts controlled by the couple and recovered files in these accounts. Those files contained the private keys to access the digital wallet that is in receipt of the stolen funds. 94,000 Bitcoins were recovered valued at over $36 billion at the time of seizure.

Not for Criminals

The narrative overplayed by many lawmakers and regulators to discredit blockchain technology is that the crypto industry is rife with scams. Financial products whether conventional or on the blockchain can be misused by bad actors. 

Crypto products should not be given a stricter regulatory regime than their legacy counterpart. It is an industry that must be regulated to weed out suspicious activities but it must be on a level playing field. With the current revelation by the DOJ on enforcement’s ability to trace the money trail, regulators should be prepared to embrace crypto technology. 

Source : bsc.news