Key Points

• The US Government proposed returning seized BTC from the Bitfinex Hack Wallet as in-kind restitution.
• The notes also reveal there is no “victim” for the specific offenses of conviction in the proceedings.

According to the latest reports, the US government proposed returning the seized Bitcoin from the 2016 Bitfinex hack to its rightful owners as in-kind restitution.

The official notes conclude that there is no “victim” for the specific offenses of conviction in the proceeding. Also, the Court has the authority to order voluntary restitution pursuant to the defendants’ plea agreements.

The voluntary restitution should reportedly include all of the assets seized from the Bitfinex Hack Wallet. Also, all other seized assets listed in the Corrected Second Amended Attachment A (ECF 195) should be subject to the ongoing third-party ancillary forfeiture proceedings.

The 2016 Bitfinex Hack

Back in November 2024, it was reported that the US DOJ set up a website to collect statements from people affected by the 2016 BItfinex hack.

The initiative was announced in a November 7 Dept. of Justice press release, aiming to provide potential victims an opportunity to relay how they may have been impacted by the criminal conduct of Ilya Lichtenstein and his wife, Heather Morgan.

The DOJ’s position was that there are no victims under the Crime Victims’ Rights Act (CVRA) for the offenses of conviction.

Back in August 2016, Ilya Lichtenstein infiltrated the crypto exchange Bitfinex, resulting in the theft of about 120,000 BTC and BCH.

When the assets were stolen, they were worth about $72 million, but now they are worth billions.

Following the breach, Lichtenstein developed a complex scheme to launder the stolen assets, and the plan involved multiple layers of transactions, using crypto mixers, engagement with non-compliant exchanges, using darknet markets, and transferring funds via bank accounts both in the US and abroad.

Heather Morgan assisted Lichtenstein in laundering the illicit funds, and the couple continued their activities until their arrest in February 2022. They were charged with conspiracy to commit money laundering and defraud the US.

On August 3, 2023, he pleaded guilty to one count of money laundering conspiracy.