A hacker compromised US government crypto wallets, stealing $20 million in seized funds from the 2016 Bitfinex hack.
US Government Wallets Breached
A recent cyberattack compromised crypto wallets likely controlled by the US government, according to Arkham Intelligence. The hacker drained $20 million from these wallets, which included assets seized after the infamous 2016 Bitfinex hack. The event has raised new concerns over government-held cryptocurrency security.
Details of the Attack
On October 24, the hacker transferred stolen funds to a wallet beginning with “0x348.” The assets included US Dollar Coin (USDC), Tether (USDT), aUSDC, and Ether (ETH). The funds, once in the hacker’s control, were likely laundered through other addresses. This process made tracking the money more challenging for authorities.
Link to Bitfinex Hack
The wallets compromised in this incident contained cryptocurrency assets seized from the perpetrators of the 2016 Bitfinex hack. The individuals responsible for the original attack, Ilya Lichtenstein and Heather Morgan, stole 120,000 Bitcoin (BTC), now valued at over $8 billion. US authorities apprehended the pair in 2022.
Government Seizure and Legal Actions
After arresting Lichtenstein and Morgan, the US government seized the stolen cryptocurrency. It marked the largest asset seizure in US digital history. The couple later pled guilty to money laundering and conspiracy charges, with Lichtenstein admitting to being the hacker.
Upcoming Sentencing for Hackers
Sentencing for Lichtenstein and Morgan is scheduled for November 2024. Prosecutors recommended five years in prison for Lichtenstein due to his cooperation and lack of a prior criminal record. Morgan, deemed a lower-level participant, may face an 18-month sentence for her involvement in the scheme.
Laundering and Conversion of Funds
According to Arkham Intelligence, the hacker has started converting stablecoins into Ether, further complicating the asset recovery process. The hacker is believed to be using known money laundering services to obscure the trail of funds.
Significance of the Attack
This attack raises significant questions about the safety of government-controlled crypto wallets. Despite seizing billions in stolen assets, authorities must now find ways to protect these funds from future breaches.
Looming Challenges in Crypto Security
With this latest breach, cybersecurity in the digital asset space remains a hot topic. The US government, like many organizations, faces the ongoing challenge of securing seized crypto assets, especially as hackers continue to develop more sophisticated methods.
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