Some of the cryptocurrency had been recovered from various thefts and fraud schemes
Arkham Intelligence recently reported a significant security breach involving a government-controlled cryptocurrency wallet, with a hacker seizing nearly $13 million. The wallet in question held assets the US government had previously recovered from the 2016 Bitfinex hack. In that hack, a staggering 120,000 Bitcoin was stolen by Ilya Lichtenstein, with his wife, Heather Morgan, later arrested in connection with the case. The Bitfinex breach remains one of the largest cryptocurrency heists to date, with a current value estimated at over $8 billion.
According to Arkham, the recent breach of the government wallet saw the hacker transferring funds to an address starting with “0x348.” The funds included various cryptocurrencies, such as USD Coin (USDC), Tether (USDT), aUSDC and Ether (ETH). Soon after transferring the assets, the hacker reportedly began converting the stablecoins into Ethereum, with attempts to obfuscate transactions through services commonly used for money laundering.
This wallet, managed by the US government, had held funds seized from Lichtenstein and Morgan. In 2022, US authorities captured the couple, and both have since pleaded guilty to money laundering and conspiracy charges.
Morgan is scheduled for sentencing in November, and prosecutors have advocated for lighter penalties due to her cooperation with the investigation. For his role as the primary orchestrator, Lichtenstein may receive a five-year sentence, significantly reduced from the original 20-year recommendation, based on his assistance with authorities and a lack of prior criminal background.
This recent breach underscores the ongoing security challenges in the digital asset space, even for government-held wallets. The incident raises questions about safeguarding seized assets, especially given the hacker’s success in accessing a high-profile wallet linked to a major investigation.
