Bitfinex Hacker Ilya Lichtenstein Released Early from Prison Under Trump’s First Step Act

The 38-year-old hacker was released early after serving just over a year of his five-year sentence, crediting President Donald Trump’s First Step Act for his freedom.

Lichtenstein announced his release on X (formerly Twitter), stating: “Thanks to President Trump’s First Step Act, I have been released from prison early. I remain committed to making a positive impact in cybersecurity as soon as I can.”

The $10 Billion Bitfinex Heist

In August 2016, Lichtenstein orchestrated a sophisticated attack on Bitfinex, a cryptocurrency exchange based in Hong Kong. Using advanced hacking tools, he breached the exchange’s network and authorized over 2,000 fraudulent transactions. The attack drained 119,754 Bitcoin from customer wallets.

At the time of the theft, the stolen Bitcoin was worth approximately $72 million. However, as cryptocurrency values surged over the years, the stolen funds appreciated to $4.5 billion by the time of Lichtenstein’s arrest in February 2022. Today, those same Bitcoin are valued at over $10 billion.

Source: @cipherstein

After stealing the funds, Lichtenstein deleted access credentials and log files from Bitfinex’s systems to cover his tracks. He then enlisted his wife, Heather Morgan, to help launder the stolen cryptocurrency through an elaborate scheme that lasted years.

Complex Money Laundering Operation

The couple used sophisticated techniques to hide the stolen Bitcoin’s origins. They created fake identities to open accounts on darknet markets like AlphaBay and cryptocurrency exchanges. They also used mixing services including Bitcoin Fog, Helix, and ChipMixer to obscure the trail of transactions.

Other laundering methods included converting Bitcoin to different cryptocurrencies in a practice called “chain hopping,” using U.S. business accounts to appear legitimate, and even purchasing gold coins that Morgan buried for safekeeping. The couple spent portions of the stolen funds on NFTs, Walmart gift cards, and everyday purchases like Uber rides.

Federal authorities arrested the couple in February 2022 after discovering a spreadsheet in Lichtenstein’s cloud storage containing wallet addresses and private keys linked to the stolen Bitcoin. This discovery allowed investigators to seize approximately 94,631 Bitcoin, worth $3.6 billion at the time—the largest financial seizure in Department of Justice history.

Cooperation Led to Reduced Sentence

In August 2023, Lichtenstein pleaded guilty to conspiracy to commit money laundering and admitted he was the original hacker. His wife, Morgan—an aspiring rapper known as “Razzlekhan”—pleaded guilty to money laundering conspiracy and conspiracy to defraud the United States.

Lichtenstein received a five-year sentence in November 2024, far below the maximum 20-year term he faced. Morgan was sentenced to 18 months. Both received lighter sentences because they cooperated extensively with federal prosecutors on other cryptocurrency crime cases.

Most notably, Lichtenstein testified in March 2024 against Roman Sterlingov, the alleged operator of Bitcoin Fog. His testimony helped convict Sterlingov, who received a 12.5-year prison sentence. Prosecutors found that Bitcoin Fog processed over $400 million in transactions from illegal markets like Silk Road and AlphaBay.

First Step Act Enables Early Release

The First Step Act, signed into law by President Trump in 2018, allows federal prisoners to earn early release through rehabilitation programs and good behavior. The bipartisan criminal justice reform law aims to reduce the federal prison population and help non-violent offenders reintegrate into society.

Lichtenstein qualified for early release because his crime was classified as non-violent, he participated in prison programming, and he provided substantial cooperation to federal investigators. His case marks another example of cryptocurrency offenders receiving leniency under provisions enacted during Trump’s administration.

Trump’s current term has seen several high-profile pardons and sentence reductions for crypto industry figures. In January 2025, Trump pardoned Ross Ulbricht, founder of the dark web marketplace Silk Road, just one day after his inauguration. In October 2025, he pardoned Binance founder Changpeng Zhao, who had pleaded guilty to Bank Secrecy Act violations. Trump also pardoned BitMEX co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed in March 2025.

Bitcoin Recovery and Restitution

By 2025, federal authorities had recovered over 119,000 of the stolen Bitcoin. A federal court ruled in early 2025 that Bitfinex is the sole victim entitled to the seized cryptocurrency, rejecting claims from individual users who lost funds in the hack.

The court ordered that the Bitcoin be returned to Bitfinex through “in-kind restitution,” meaning the exchange will receive the actual cryptocurrency rather than its cash value. The exchange has committed to using 80% of the recovered funds to repurchase and burn UNUS SED LEO tokens, which were created to compensate affected customers after the 2016 hack.

Notably, the Bitfinex-linked Bitcoin were explicitly excluded from Trump’s proposed Strategic Bitcoin Reserve. The coins must be used for victim restitution under the Mandatory Victims Restitution Act, preventing the government from adding them to any federal cryptocurrency holdings.

Morgan’s status remains unclear, with conflicting reports about whether she entered prison or was placed in alternative custody. Her case gained additional attention after Netflix released “Biggest Heist Ever” in December 2024, a documentary examining the couple’s crimes and eccentric lifestyle. Morgan publicly criticized the documentary’s portrayal of her role in the crime.

The Final Chapter

Lichtenstein’s early release closes one of cryptocurrency’s most notorious crime stories. From a $72 million hack to a $10 billion recovery, the case demonstrated both the traceability of blockchain transactions and the challenges of prosecuting digital asset crimes.

His cooperation with prosecutors set important precedents for how authorities investigate cryptocurrency mixing services and darknet markets. Whether his stated commitment to cybersecurity represents genuine reform or simply part of his path to freedom remains to be seen. What’s certain is that the Bitfinex hack will remain a landmark case in cryptocurrency crime history for years to come.