Couple plead guilty to massive money laundering scheme
Ilya Lichtenstein and Heather Morgan have pleaded guilty to money laundering linked to the hack and theft of approximately 120,000 bitcoin from Bitfinex, a leading cryptocurrency exchanges.
Their arrests occurred in February 2022 when the US government managed to seize approximately 95,000 of the stolen bitcoins from cryptocurrency wallets under the defendants’ control. The recovered funds were valued at $3.6 billion at the time of the seizure. Since then, the government has further seized approximately $475 million associated with the hack.
According to court documents, the elaborate scheme involved Lichtenstein employing sophisticated hacking tools and techniques to gain unauthorized access to Bitfinex’s network. More than 2,000 fraudulent transactions were then executed, transferring 119,754 bitcoin from Bitfinex to a cryptocurrency wallet under Lichtenstein’s control. To cover his tracks, Lichtenstein went back into Bitfinex’s network to delete access credentials and log files that could have led to his detection by law enforcement.
Following the hack, Lichtenstein enlisted the assistance of his wife, Heather Morgan, in laundering the stolen funds. The couple utilized various highly advanced laundering methods, including setting up online accounts using fictitious identities, automating transactions with computer programs, and depositing the stolen funds into darknet markets and cryptocurrency exchanges, then rapidly withdrawing them to obscure the transaction history. They also converted the stolen bitcoin to other cryptocurrencies, including anonymity-enhanced cryptocurrency (AEC), using a practice known as “chain hopping.” Additionally, the pair deposited portions of the gains into cryptocurrency mixing services to further obfuscate the money trail. They even attempted to legitimize their banking activity by using US-based business accounts.
This case serves as a further reminder of the importance of robust compliance measures in the cryptocurrency industry. As authorities continue to investigate and prosecute financial crimes involving digital assets, compliance teams must remain vigilant and proactive in identifying and preventing illicit activities, including money laundering and fraud, to safeguard the integrity of the global financial system.
FCA publishes financial promotions data for Q2 April to June 2023
The latest quarterly data from the Financial Conduct Authority regarding financial promotions has been published.
Highlights from the report include:
- FCA interventions in 2023 Q2 resulted in 1,507 promotions being amended or withdrawn by authorized firms.
- 301 financial promotions from multiple sources were reviewed
- 41% of cases reviewed were in the retail lending space
- 29% of the cases reviewed were in retail investments
- 6,387 reports about potential unauthorized business were received
The updated data also notes that the launch of the Consumer Duty represents a significant shift in the regulator’s expectations, setting higher standards of consumer protection, which should enable the regulator to continue to raise industry standards.
ASIC warns of focus on market misconduct
The Australian Securities & Investments Commission has warned participants that strong, targeted enforcement action will continue in the coming months as part of its focus on protecting consumers from harm and upholding market integrity. The warning comes as ASIC announces an enforcement fine total of nearly $110 million for the first six months of the year.
ASIC Deputy Chair Sarah Court said, ‘Promoting market integrity and addressing misconduct that places consumers and investors at risk are enduring priorities for ASIC. Our commitment to insider trading and market manipulation deterrence continues and we expect further action for related misconduct in the coming months.’
A selected summary of key developments for regulated financial institutions
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