Ilya Lichtenstein, the main suspect in the 2016 Bitfinex theft, has reportedly been released from federal custody after serving about 14 months of a five-year sentence.
He was sentenced in November 2024 on charges of money laundering conspiracy related to the theft of approximately 120,000 bitcoins. This is one of the largest cryptocurrency thefts on record.
The move has reignited debate about prison credits and how reform laws affect high-value cybercrime cases.
Bitcoin hacker’s release reflected in First Step Act
According to Lichtenstein’s public posts and interviews, he credits his initial freedom to the First Step Act, a prison reform law signed by U.S. President Donald Trump in 2018.
According to the report, he was confined to his home after earning hours earned and qualifying for the program, a process allowed under federal regulations.
He posted a short message on social media thanking Trump and saying he would like to work in cybersecurity in the future.
Thanks to President Trump’s First Step Act, I was released from prison early.
I am committed to making a positive impact on cybersecurity as quickly as possible.To our supporters, thank you for everything.
To the haters, I look forward to proving you wrong.— Ilya Lichtenstein (@cipherstein) January 2, 2026
Theft and Sentence
According to a report from federal prosecutors, the Bitfinex breach involved about 120,000 bitcoins, which at the time were worth about $71 million, and whose value later soared as the market rose.
Lichtenstein pleaded guilty and was sentenced to five years in prison on November 14, 2024, in U.S. District Court. The Justice Department described the laundering operation as complex and said prosecutors had recovered most of the stolen funds.
details of the case
According to the report, Lichtenstein and his then-partner, Heather Morgan, used tiered transfers, fake identities, and switching between services to obscure the source of the funds.
The couple was arrested in 2022 after agents traced a series of private keys and other evidence to their accounts.
Morgan, known online as Razzlekhan, also pleaded guilty and received a shorter sentence. She was also reportedly released early.
Image: McAfee
The case attracted a lot of attention because agents later seized many of the assets involved in the hack.
Bitcoin Recovery, Seizures and Public Reaction
Investigators recovered more than 90% of the stolen Bitcoin and the government seized billions of dollars worth of cryptocurrency-related assets, according to federal filings and news agencies, in what prosecutors called one of the largest recoveries in U.S. history.
The sale and storage of such assets remains part of the ongoing management phase. Many legal experts and the public have put off the timing and perspective of early disclosure, arguing that a case involving billions of dollars in stolen property raises unusual questions about deterrence and fairness.
Featured image from Unsplash, chart from TradingView
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