In a remarkable turn of events, Ilya Lichtenstein, the famed hacker responsible for the 2016 loss of 120,000 bitcoin from the cryptocurrencycurrency exchange Bitfinex, has agreed to cooperate with the US government.
Lichtenstein testified in a Washington court on Tuesday, detailing how he obtained access to Bitfinex’s computers and stole billions of bitcoin over several months. The 36-year-old, who claimed that financial difficulties with his IT firm prompted the robbery, also admitted to hacking into other exchanges including as Kraken and Coinbase.
Following the robbery, Lichtenstein used Bitcoin Fog, a money laundering tool, to conceal the stolen monies before putting them into exchanges via darknet accounts. While just $3.6 billion of the cash was seized in what became the greatest government seizure in history, Lichtenstein’s testimony heralds a new tactic for the US to combat cryptocurrencycurrency crime by turning hackers into informants.
The government’s BTC reserves continue to grow as a result of such seizures, even though the fate of the remaining stolen bitcoin from Bitfinex is undetermined. Nonetheless, Lichtenstein’s change from indicted hacker to cooperating witness is a significant surprise.
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