Revisiting the One of Biggest Crypto Scams Ever

Revisiting the One of Biggest Crypto Scams Ever

Cryptocurrencies have the undeniable potential to expand even further and develop themselves as rivals to national currencies. As it stands, they have already integrated themselves into the society and secured an important spot in the world of digital transactions.

Priding itself on a very secure and traceable blockchain, hacks and scams are an extremely rare occurrence in the world of crypto. This is because all the new data and info on the chain connects to a previous block, all the while having many inherent security attributes. Despite this though, there were some massive exceptions to the rule.

Not necessarily in cases of entire blockchains being broken into, but just individual exchanges and trades, often using third party vulnerable services. As we will learn below though, while stealing crypto currencies inside trades is a terrible and difficult job, it is even harder to get away due to the data about the stolen currencies constantly being traced, and being a part of the blockchain forever.

Security of Crypto

Before getting into it, it is important to note that despite the already top-notch security of the blockchain, it is only getting safer and safer. We very rarely hear about frauds such as this one, and that is largely due to the fact that people are more educated now when it comes to these digital currencies.

After all, the growing popularity of the industry also has spawned novel resources and help with cryptocurrencies, as more and more people start investing in digital assets. These resources do a spectacular job with guiding newcomers away from potential dangers in the space, as well as susceptibility to fraud.

Married Couple 4.5 billion Dollar Scam

Moving on though, this one is a very bizarre story about Ilya Lichtenstein and his wife Heather Morgan, and their attempt to steal and launder four and a half billion dollars worth of Bitcoin. While his peers described Ilya as a quiet and observant tech nerd, Morgan had quite a strange social media presence. She was an amateur rapper, as well as a writer for Forbes, ironically often discussing cyber security, giving out tips to protect others.

The story starts in 2016, in the Bitfinex exchange service. The service had a rocky history since its inception in 2012, four years after that in would become susceptible to a massive 120 thousand units of BTC heist, shaking the entire world Crypto at the time, and halting all exchanges temporarily. In addition, the price of Bitcoin was dropped by 20%, and Bitfinex customers had their balances reduced by 36%, and had to compensate via coins of equal value.

Due to these massive consequences, the entire world of Crypto as well as authorities were on the case, yet despite this, they would not find the culprits up until years later. While the exact method of the hack is unknown, there are obviously leading theories. As mentioned, third party services are often vulnerable when it comes to digital exchanges, and good hackers happened to be capable of enough to exploit that fact.

This method avoids dealing with the blockchain when trying to steal, but cannot avoid it when they want to move around, or convert the BTC into actual currencies. The entire community had eyes on the stolen coins, tracing it, giving the hackers no room to actually move it to a singular traceable wallet. As a result, the stolen BTC was banned from other crypto exchanges all over the chain.

Around 21% of the stolen 120 thousand units of BTC was shuffled around in a complex money laundering process, allegedly using the dark web since they were blacklisted from many normal mainstream exchange services. Ultimately, the statistics are now available that the couple successfully laundered only 4% of the stolen BTC.

This does speak volumes about the power of the community, as well as the benefits of having a traceable blockchain. Being blacklisted and having the BTC constantly watched made the transactions and laundering almost impossible considering all the risk.

How the couple was caught

As a result, most of the BTC was just sitting there for years, as the couple were unable to exchange it. Ultimately, they would get tired of just waiting around though, and would make their move via another complex laundering tactic, involving the BTC being split into many parts using other coins, but ultimately still redirected to a singular wallet. This activity was tracked by the authorities, eventually leading them to Ilya and his wife Heather.

It was later discovered that the couple had plans of moving to Ukraine under new and fake identities, but they got unlucky due to the explosion of Covid. After attaining a search warrant for Ilya Lichtenstein’s digital wallet, US law enforcement seized over 3.6 billion dollars worth of coin. They were also able to trace the wallets back to the original Bitfinex hack back in 2016, confirming that the couple was responsible.

Additional interesting info is the fact that some of the documents found lead to the purchases of fake ID’s as well as passports, most likely a part of the couple’s plan to move to Ukraine. They did use a VPN when purchasing these items through the dark web, but at the same time used their real names and Emails, which would be deemed a sloppy move.

Ultimately, due to how the crypto industry and transactions work, Ilya and Heather were not able to get away with the stolen BTC, and are currently under arrest. Their attempt went down in history as one of the biggest and most interesting digital heists.

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