Blockchain Traceability Leads to Bust of Criminals in USD$3.6 billion bitcoin seizure
The US Department of Justice has arrested 2 individuals in New York, alleging they were conspiring to launder cryptocurrency stolen during the 2016 hack of Bitfinex. At the time, the hack involved the theft of 119,754 bitcoin (worth USD$70 million then). As part of the arrest, the DoJ seized bitcoin and other cryptocurrency worth USD$3.6 billion on today's prices, including over 94,000 bitcoin.
Thanks to the traceability of transactions on the bitcoin network, the wallets where the stolen bitcoin was moved have been watched for years, and movements in wallets over a month ago were the subject of speculation online, but it turns out those movements were the DoJ shifting the seized assets. The complaint from the DoJ includes diagrams setting out the alleged laundering methods used by the accused.
The Assistant Attorney General Kenneth Polite said:
Today, federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system
Steve Francis of Homeland Security said:
[the accused] attempted to subvert legitimate commerce for their own nefarious purposes, operating with perceived anonymity. Today’s action demonstrates HSI’s commitment and ability to work with a collation of the willing to unravel these technical fraud schemes and identify the perpetrators, regardless of where they operate
It is interesting how the DoJ press release both refers to following "money" through the blockchain and the importance of ensuring consumer confidence in the financial system. It follows other busts including the takedown of the Welcome to Video site, the return of most of the Colonial Pipeline ransom paid in that ransomware incident, sanctioning of a Russian exchange involved in laundering as well as reports showing crypto-crime is concentrated in a very small number of wallets relative to the size of the overall market.