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Netflix is making a documentary on Bitfinex hack involving 120,000 bitcoin

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In the most significant criminal crypto crime case in history, Netflix plans to release a documentary series about a married couple’s alleged attempt to launder billions of dollars in stolen bitcoin.

On Tuesday, February 8, Ilya “Dutch” Lichtenstein and Heather Morgan were detained in their New York City residence on allegations of conspiring to launder about 120,000 Bitcoin linked to a 2016 breach of a crypto exchange bitfinex. The pair was accused of attempting to liquidate their digital assets by creating false identities and online accounts and purchasing real gold, NFTs, and other assets. The value of the stolen Bitcoin at the time of the hack was $71 million. The current value of the loot is worth nearly $5 billion. At the same time, investigators raced to track the money’s movement on the blockchain.

Chris Smith (FYRE: The Greatest Party That Never Happened, Tiger King) will direct and executive produce alongside Nick Bilton (Fake Famous, The Inventor: Out for Blood in Silicon Valley, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road).

Netflix’s history with crypto

The latest announcement is the firm’s newest move into the crypto-crime world. Last year, Netflix announced the release of “Trust No One: The Hunt for the Crypto King,” a film about the QuadrigaCX exchange, whose founder Gerald Cotten died unexpectedly while possessing the keys to customers’ accounts, resulting in the loss of millions of dollars in Bitcoin and other cryptocurrencies.

On Tuesday, Lichtenstein and Morgan were detained in New York and charged with fraud and money laundering for allegedly attempting to launder 120,000 bitcoins from bitfinex. On the day of their arrest, the two appeared in federal court and face a new bail hearing on Monday.

The husband-and-wife team is currently awaiting trial, but they have been denied bail because the prosecutor believes they will abscond. According to Bloomberg, Lichtenstein kept a “personas” folder and a “Passport ideas” file on his computer containing links to counterfeit passports. According to the prosecutor, a plastic bag marked “burner phones” was discovered beneath their bed.

There is no point in question that this documentary series will break the bars.

Cryptocurrency theft: US couple arrested over laundering $4.5B in Bitcoin

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In what is being called the biggest-ever cryptocurrency theft, the U.S. Justice Department on 8th February 2022 said that it has seized a whopping $4.5 billion in bitcoin from a couple who has allegedly washed the illegal proceeds linked to the 2016 hack of the cryptocurrency exchange Bitfinex resulting in the arrest of the duo on money laundering charges.

Prosecutors said New Yorkers Ilya “Dutch” Lichtenstein, 34, and his wife, Heather Morgan, 31, splurge the stolen money on items ranging from gold and non-fungible tokens to even a $500 Walmart gift card, prosecutors said.

Calling it as the Justice Department’s “biggest financial seizure”, Deputy Attorney General Lisa Monaco said, it shows cryptocurrency is “not a safe haven for criminals.”

Lichtenstein and Morgan face charges of conspiring to commit money laundering as well as to defraud the United States. The case was filed in a federal court in Washington, D.C.

How did the US D.O.J unearth the biggest cryptocurrency heist?

As per sources, the pair is accused of conspiring to launder 119,754 bitcoin stolen after a hacker gained illegal access into Bitfinex and initiated more than 2,000 unauthorized transactions. Justice Department officials said the value of the transactions at the time of the incident stood at $71 million in bitcoin, but with the rise in the currency’s value, the value now is at a staggering $4.5 billion.

That being said, a crucial clue that led to the case might have come from the 2017 bust of an underground digital market that used to launder a portion of the funds. U.S. officials said some of the money was transferred to AlphaBay, a version of eBay hosted on the dark web.

When the site was taken down, it likely led authorities to access AlphaBay’s internal transaction logs and linked them to a cryptocurrency account in Lichtenstein’s name, according to digital assets tracking firm Elliptic.

Bitfinex released a statement stating it was working with the Department of Justice to “establish our rights to a return of the stolen bitcoin.”

As for the two accused, they would both be kept on house arrest, with electronic monitoring, and will be barred from engaging in cryptocurrency transactions pending trial.

94,643.29 Stolen BTC from 2016 Bitfinex hack moved

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According to the reports by Whale alert, large amounts of BTC, which were stolen during the 2016 Bitfinex hack, started moving to an unknown wallet. The hackers carried out the first transaction on (Tue, 01 Feb 2022 04:14:24 UTC). Initially, they moved 1 BTC to the anonymous wallet. As of now, 26 transactions have been carried out on the anonymous wallet. The wallet holds 94643.29 BTC at the time of writing.

Whale alerts is a transparent platform for tracking and analyzing millions of transactions every day. They reported the incident on Twitter, providing the details of the move.

History of the 2016 Bitfinex BTC hack

In August 2016, almost 120,000 bitcoins – now worth roughly $4.6 billion – were stolen from the famous crypto exchange Bitfinex. The hackers may have felt that the challenging portion of their crime was over. However, barely 21 percent of the stolen bitcoins have been transferred after five years, and just 4 percent have been laundered or swapped.

The 119,756 bitcoins stolen from Bitfinex were first transmitted to a single wallet, and 79 percent of them remain there to this day. After a rush of transactions in early 2017, there were very few outflows from the wallet until 2020, when there was a significant rise in activity. In April 2021, 12,241 BTC of the stolen assets were relocated, having a value at the time of $774 million. This rise was presumably spurred by the surging Bitcoin price, which rose more than 700 percent during the prior year.

Elliptic said the hackers laundered the money through darknet markets like Hydra and privacy-focused Wasabi wallet. These marketplaces provide cash-out services with drugs, hacking equipment, and bogus IDs. These allow Bitcoin to be exchanged into gift cards, prepaid debit cards, or actual cash. Software wallets like Wasabi assist in avoiding blockchain tracing, employing a kind of transaction known as a “coinjoin”. It is estimated that over 13 percent of the profits of crime in bitcoin are laundered using private wallets.

The inability of the hackers to move the fund tells a story about the crypto industry’s maturation and how law enforcement capabilities, regulation, and blockchain analytics have combined to make crypto crimes extremely difficult. But to date, they were unable to trace back to the hackers who committed this monstrous loot.

Bitfinex to remove 6 trading pairs; ask Ontario users to close accounts

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Leading cryptocurrency exchange Bitfinex announced the withdrawal of half a dozen crypto trading pairs by the end of January 2022, citing low liquidity levels. According to the trading platform’s official statement, the measure is aimed to consolidate and improve liquidity, enabling users a more streamlined and optimized trading experience. Following are the trading pairs that are planned to be removed.

pNetwork [PNT/BTC], [PNT/ETH]; Basic Attention [BAT/BTC], [BAT/ETH]; Streamr [DATA/BTC]; Metaverse [ETP/ETH]

The crypto exchange noted that the underlying tokens have not been delisted and are still available for trading on Bitfinex. It reminded its customers to cancel any open orders with the above trading pairs before 31st January 2022 [Monday] since all remaining open orders will be canceled by the system itself. Further, the post informed that from 17 January 2022 at 10:00 AM UTC onwards, users can only reduce their margin positions in PNT/BTC, PNT/ETH, and ETP/ETH.

Having said that, Bitfinex announced that it is discontinuing services in the Canadian province, Ontario.

Bitfinex issues notice to Ontario users

Bitfinex on the same day announced that it is making ‘changes’ to the Services provided to its Ontario customers. The trading platform informed that users who met the following conditions will have their accounts closed by March 1, 2022. It also advised them to withdraw their funds on or before March 1. Bitfinex did not specify the reason behind the move, at the time of writing this news.

It needs to be mentioned that the region’s financial agency, Ontario Securities Commission [OSC], has been responsible for coming down hard on a number of crypto exchanges operating in the area, like OKEx, Bybit, etc. On top of that, Canadian cryptocurrency exchanges hint at a biased treatment as they allege that Crypto.com, a Singapore-based trading platform is freely expanding its services across the nation without any approval from the local authorities.

Michael Arbus, CEO at Bitbuy stated,

It is hard for Canadian crypto companies to compete with these unregulated multinational platforms, like Crypto.com, and their massive marketing budgets on our home soil. This allows these international platforms to market a lot of coins and products that our Canadian regulators would never approve if they were licensed.

Bitfinex launches new trading platform- Bitfinex Securities

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Prominent cryptocurrency exchange, Bitfinex is all set to foray into the world of traditional finance by offering tokenized equities and bond trading on its new trading platform – Bitfinex Securities. The platform is a regulated investment exchange in the AIFC Fintech Lab that aims at ramp up accessibility to a large set of financial products for eligible members who wish to diversify their portfolio.

It tweeted,

“We’re pleased to announce, Bitfinex Securities Ltd, a regulated investment exchange designed to increase accessibility to a variety of innovative financial products.”

The official announcement also detailed that the Bitfinex Securities platform is designed to expedite the capital raising process for issuers seeking to have their tokenized securities publicly traded with the help of a seamlessly accessible “admission to trading” process. With the latest move, Bitfinex also intends to broaden access to a variety of innovative financial tools that also includes blockchain-based equities and bonds, in addition to investment funds.

Bitfinex Securities in brief:

According to the blog post, the platform will be available 24/7, which is how the cryptocurrency space works. In addition to that, the newly launched initiative will implement cutting-edge tech to reduce costs, enhance efficiency and optimize the success rate of capital raises. Overcoming these inconsistencies will enable investors to gain access to a cost-efficient, high-performing, and global security trading market.

Several other prominent cryptocurrency exchanges such as FTX and Bittrex Global have launched similar offerings. But the latest securities platform is unique from stock token trading, which is offered by the two aforementioned exchanges. One of the glaring differences, for instance, is that duo list tokens of stocks that are already public. On the other hand, Bitfinex Securities, which is based in Astana, Kazakhstan, revealed that it would list equities, bonds, or funds of private companies that are seeking to go public via a tokenized issue.

Stablecoin issuer Tether releases breakdown of its reserves

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The stablecoin issuer Tether released a report consisting of a breakdown of its reserves as of 31st of March 2021. This is the first of its kind since Tether’s launch in July 2014.

The pie chart below shows that the company held approximately 76% of its reserves in cash and cash equivalents and other short-term deposits and commercial paper.

Tether
Stablecoin issuer Tether releases breakdown of its reserves 2

With a share of 65.39%, commercial paper formed the major chunk of the stablecoin giant’s cash and cash equivalents cohort. Fiduciary deposits, on the other hand, accounted for 24.20% of the same category, while cash, reverse repo notes, treasury bills comprised 3.87%, 3.60%, and2.94% respectively.

The remainder of the platform’s reserves were split up across three groups. For instance, secured loans [none to affiliated entities] formed 12.55% of the total reserves while corporate bonds, funds, and precious metals collectively represented 10%. Moreover, other investments, including digital tokens, constituted 1.64%.

Reason Behind Tether’s First-ever Reserve Composition Release

The latest report essentially underscores the company’s efforts to remain in compliance with a settlement with the New York Attorney General [NYAG] whose probe ended in March. Tether and its sister company/cryptocurrency exchange Bitfinex had to pay an $18.5 million fine in addition to agreeing on the release of quarterly breakdowns of its reserves. In line with this, Tether stated,

“Today’s publication reflects our continued dedication to making this information public as part of our ongoing commitment to transparency and setting the standard in our industry. We embrace that commitment to our community.”

Earlier this month, its stablecoin [USDT] on-chain’s volume had climbed to a new milestone of a whopping $1 trillion for the first time ever. Despite several controversies and the emergence of several stablecoins over the past few years, Tether continued to dominate the realm. At the time of writing controls well over 60% of the market share of the total stablecoin transaction volume.

Bitcoin [BTC] From 2016 Bitfinex Hack On The Move

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The crypto industry is no stranger to hacks or scams. While some go on to lose a large number of Bitcoins, a few others have lost personal data. Bitfinex, a prominent cryptocurrency exchange, went on to experience the largest hack to date. Back in 2016, the exchange was subjected to a massive attack, which resulted in the loss of nearly 119,756 BTC.

More recently, the hacker behind these stolen funds decided to move some of the loot. While the hacker has moved some of the BTC in the past, this time it seemed to have caused a drop in the price of the king coin.

Bitcoin Worth More Than $740 Million Moved

Prominent analytics platform, Whale Alerts went on Twitter to alert the community of the massive transaction that took place. In an array of tweets, the portal revealed that over 11,799 BTC was moved in over 30 transactions. Most of the transactions were for about 1 or 1.5 BTC, the largest transaction entailed over 1,000 BTC. The tweet below sheds light to the largest transaction that was worth about $78 million.

Furthermore, the community speculated that this could have caused the recent drop in the price of BTC. Just yesterday, Bitcoin surged up to a high of $64K. However, in no time the asset collapsed to $62K with a 2.79% dip in the last 24-hours.

However, some investors like Alistair Milne tweeted,

“No, the Bitfinex hacker can’t sell the #Bitcoin (not in any volume). But he/she/they can move it to try to manipulate the market while they short it elsewhere …”

Additionally, Santiment, a prominent on-chain analytics platform pointed out that the whales would look for opportunities to “make big moves.” Turns out Bitcoin wasn’t the only asset experiencing $100+ transactions, ETH, reportedly followed suit. The tweet further read,

While this did cause quite a stir in the crypto-verse, the hacker or hackers behind the attack are still on the run. The exchange did not garner any luck, despite offering an award of $400 million.

New York Bids Adieu To Tether And Bitfinex

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Cryptocurrency trading in the United States of America, especially New York has been comparatively tougher than it is in other countries as well as states. Several crypto platforms have been rolling out trading platforms exclusively for the citizens of the US. However, the state seems to be stringent particularly with platforms that have had a bad past. Bitfinex as well as the stablecoin, Tether seem to be reaping the mistakes of their past.

Bitfinex’s parent company iFinex’s tiff with the New York State has been going on for about two years now. Earlier this week, the case sought a conclusion through a settlement, which coerced the platform to get out of the American state.

New York State Attorney General Calls Out Bitfinex And Tether

On Tuesday, the New York Attorney General Letitia James revealed that the iFinex case had finally come to an end. Both Bitfinex and Tether reportedly agreed to pay a fine of $18.5 million. With this, both these platforms were required to stop any trading activity in the state.

The Attorney General of the state further said in her statement that both the parties had “recklessly and unlawfully” concealed major damages to prolong their scheme.

The statement read,

“Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”

Just when the crypto industry is moving past its nascent stage in terms of adoption, Bitfinex and Tether would be losing a major region.

Attorney James even went on to tweet about the latest event and stressed the fact that those who engage in activities surrounding crypto would be subject to laws of the state. The tweet read,

Furthermore, New York Attorney General James suggested that this case and its legal repercussions could be used as a message against “corporate greed”.

Bitfinex Parent Company, iFinex Receives Another Deadline To Present Documents

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The crypto-verse harbors several legal cases. The Bitfinex/Tether case has been one of the longest and most controversial cases in the industry. The battle between iFinex, the parent company of one of the biggest exchanges in the crypto industry, Bitfinex, and the New York Attorney General [NYAG] seems to be getting nowhere as another extension of a deadline was requested by the parties involved.

Bitfinex and Tether Case Takes A New Turn

iFinex has been in court fighting against the NYAG since April 2019 following an $850 million cover-up of funds. iFinex had been holding back from presenting the documents that were required for the case. However, the latest virtual hearing seemed to have cooled things down as the Office of the New York Attorney General [OAG] penned down a letter to Justice Joel M. Cohen seeking an extension for iFinex to submit the documents before the court.

The Attorney General pointed out that the deadline that was set during the virtual conference that took place on 17 September 2020 wasn’t enough for iFinex to gather the required documents. Hence, a plea to extend the deadline for submission to 15 January 2021 was presented in the letter. The letter was written on 9 December 2020 and the Judge approved the extension on 12 December 2020.

In the previous letters, iFinex was time and again called out for not submitting documents at the assigned time. In a filing, the OAG suggested that it would urge the Court to order the “immediate production of documents and information by Respondents” at the video conference. However, in the latest letter, the NYAG revealed that since the previous meeting [the virtual conference] the parties involved in the case were cooperating especially in the submission of the documents. Additionally, the NYAG affirmed that the parties would present themselves before the court if summoned.

While the case is still in court, the parties involved in the case remain almost unfettered. Tether has been aiding the overall market cap of the crypto industry as it been recording an exponential surge. At the time of writing, the market cap of the largest stablecoin was extremely close to that of XRP’s. With the market cap of XRP at $25.15 billion, Tether’s [USDT] market cap was at $19.7 billion.

Bitfinex Announces Support for Lightning Network’s ‘Wumbo Channels’

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Leading cryptocurrency exchange, Bitfinex announced integrating Lightning Network’s Wumbo Channels to expedite payment transaction time, on its platform, enabling the exchange to provide users with instant Bitcoin deposit and withdrawal capabilities.

The Wumbo channels aim to offer the Bitfinex users the ability to deposit and withdraw large amounts of Bitcoin more efficiently and in a cost-effective way. This would eventually prompt retailers and service providers to build new, innovative applications and sell high-value goods and services over the Lightning Network with the help of Wumbo Channels as they help to reduce the requirements to open and close multiple channels, the blog post revealed.

Earlier, the protocol developers had set a hard cap on the maximum capacity of the Lightning Network payment channels in order to protect users from unexpected bugs or errors in the still-nascent network was still young, since its implementations were in a development phase.

But as the second-layer scalability solution became more mature, the major implementations of the Lightning Network protocol have measures to remove the hard cap on channel capacity, which had earlier thwarted the capability for unlimited channel sizes and payment amounts.

The official announcement further read,

“With this support, the general public will have the ability to open channels up to 2 Bitcoin capacity with either of our nodes. A number of initial retailers and wallet providers like Bitrefill, LnMarkets and Lightning Labs, with the ability to open channels with up to 5 Bitcoin capacity.”

While asserting that this development was in fact a “big step towards the goal of scaling Bitcoin” through the adoption of the Lightning Network, Bitfinex also revealed 3×5 Bitcoin channels, which are the biggest channels in the network so far.

Interestingly, Bitfinex was one of the first major crypto exchanges to have integrated the second-layer protocol on its platform in December 2019 shortly after integrating bech32 [SegWit] addresses the previous month as a primary step toward the full Lightning integration.

The Layer 2 protocol has seen a steady rise in terms of the total value locked [USD] in its. At the time of writing, this figure stood at $11.74 million.