A federal judge has raised concerns over the US government’s request to return cryptocurrency seized from the 2016 Bitfinex hack to the exchange, suggesting that doing so could be “improper.”
Judge Seeks Clarification from US Government
In a filing on January 28 in the US District Court for the Southern District of New York, Judge Colleen Kollar-Kotelly asked prosecutors to clarify their position regarding the forfeiture of crypto assets to Bitfinex. The funds were seized from Ilya Lichtenstein and his wife Heather Morgan, who were convicted of laundering the stolen assets.
The US government confiscated 94,643 Bitcoin, along with smaller amounts of Bitcoin Cash, Bitcoin Satoshi Vision, and Bitcoin Gold from Lichtenstein, who admitted to hacking the exchange. However, Judge Kollar-Kotelly noted that ordering the funds returned to Bitfinex might reduce the total forfeiture amount, a move that could be considered improper based on prior court rulings.
The judge has requested the US government provide a detailed explanation by February 4, after which a decision on the forfeiture will be made.
The 2016 Bitfinex Hack and Legal Fallout
In August 2016, hackers stole approximately 119,754 BTC from Bitfinex, marking one of the largest crypto thefts at the time. US authorities arrested Lichtenstein and Morgan in 2022 for laundering the stolen funds. Both pleaded guilty in 2023, with Lichtenstein receiving a five-year prison sentence and Morgan sentenced to 18 months.
Morgan, also known by her rapper alias Razzlekhan, was scheduled to report to prison on January 24 but resumed posting on social media after her November 2024 sentencing. She launched a Cameo channel in December, branding herself as “crypto’s favorite felon.”
Although many individuals were affected by the Bitfinex hack, a court filing in October 2024 suggested that Bitfinex itself might be the only party eligible for reimbursement. The US government had previously invited victims of the hack to submit impact statements by November.
