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A Crucial Clue in the $4.5 Billion Bitcoin Heist: A $500 Walmart Gift Card
Posted on 2/16/22 at 8:57 pm
Posted on 2/16/22 at 8:57 pm
quote:
Federal investigators spent years hunting for clues in the 2016 hacking of the Bitfinex cryptocurrency exchange, when thieves stole bitcoin now worth $4.5 billion. In the end, what helped lead them to two suspects was something much more quotidian: a $500 Walmart gift card.
That card and more than a dozen others like it, including for Uber, Hotels.com and PlayStation, were linked to emails and cloud service providers belonging to a young Manhattan couple, Ilya “Dutch” Lichtenstein and Heather R. Morgan, according to a criminal complaint. Authorities arrested the couple after seizing $3.6 billion worth of bitcoin allegedly in their control—the Justice Department’s largest financial seizure ever.
The theft came in August 2016, when hackers used malware to infiltrate the Hong Kong-based Bitfinex exchange’s network and moved the bitcoin—then worth about $71 million—through more than 2,000 unauthorized transfers to an outside account. The money lay dormant for several months. In January 2017, small amounts began moving in a series of complex transactions, according to a criminal complaint filed against Mr. Lichtenstein and Ms. Morgan.
One cluster of bitcoin addresses, identified in court filings as 36B6mu, caught investigators’ attention.
On May 3, 2020, a fraction of a bitcoin went from the cluster to an exchange that sells prepaid gift cards. In return, a $500 gift card for Walmart was sent to a Russian-registered email. The transaction, however, was conducted via an IP address linked to a cloud service provider in New York that investigators linked to Mr. Lichtenstein, according to the agents.
Portions of the gift card, filings said, were then redeemed through Walmart’s phone app. Three purchases were conducted online using Ms. Morgan’s name, using one of her emails, and the couple’s apartment address was provided for delivery.
At the apartment, investigators seized a plastic baggie marked “burner phone,” more than $40,000 in cash and more than 50 electronic devices, prosecutors said in court filings.
According to prosecutors’ filings, the couple chose to leave the premises while the agents searched. They asked to bring their cat, which was hiding under the bed.
As Ms. Morgan attempted to coax the cat out from hiding, she grabbed a phone from a nightstand, the filings said. She tried to repeatedly press the lock button, which prosecutors said appeared to be an attempt to keep investigators from being able to search it, and law-enforcement officials had to wrest the phone from her.
LINK
I'll watch this movie when it comes out on Netflix.
15
Posted on 2/16/22 at 9:02 pm to rickgrimes
This story is fascinating. I agree we need a made for streaming movie on this STAT
This post was edited on 2/16/22 at 9:03 pm
Posted on 2/16/22 at 9:04 pm to rickgrimes
Posted on 2/16/22 at 9:06 pm to rickgrimes
quote:
In the end, what helped lead them to two suspects was something much more quotidian: a $500 Walmart gift card.
I was on the county Grand Jury several years ago. I was talking with the DA during a break and he said, "A majority of the crimes we deal with either start with, involve, or end with Walmart."
He was talking about petty theft, debit/credit card fraud, and drugs. Hell, I guess it even applies to multi-billion dollar heists.
Posted on 2/16/22 at 9:08 pm to rickgrimes
quote:
what helped lead them to two suspects was something much more quotidian
Posted on 2/16/22 at 9:08 pm to rickgrimes
This is why when you move money from account that has BILLIONs in stolen assets, you take a beat, buy a laptop or phone cash from a pawn shop, then make the transaction on public wifi.
I've never done it, but it sounds good in theory.
I've never done it, but it sounds good in theory.
Posted on 2/16/22 at 9:09 pm to Jax Teller
quote:
This story is fascinating. I agree we need a made for streaming movie on this STAT
It has all the right elements, including Heather's transformation from a Forbes crypto/security columnist to a rap artist in New York when she was on the run. You couldn't script it better if you tried.
Posted on 2/16/22 at 9:15 pm to rickgrimes
Good post OP. Never heard about this, but great read. Interesting stuff.
This post was edited on 2/16/22 at 9:33 pm
Posted on 2/16/22 at 9:16 pm to rickgrimes
quote:
Heather's transformation from a Forbes crypto/security columnist
A rare journalist that actually knows what she is talking about.
Posted on 2/16/22 at 9:20 pm to SECdragonmaster
quote:
Five years ago, dude pulls off the heist of the century. His wife is on his arse about not having enough shite, so to shut her up he gets her a $500 Wal-Mart gift card. She orders some shite, but instead of picking up the gotdamm scented candles and charger plates, she has them delivered. To their home address. The Feds track it and move in on them.
They are still in the clear if she will only pocket her phone before they grab it. Instead, she leaves the phone out in the open and try's to get her cat out from under the bed instead. The Feds grab her phone, figure the heist out, and off to jail they go.
Short version:
Pussy with a pussy remains doubly undefeated.
Posted on 2/16/22 at 9:22 pm to baseballmind1212
quote:
This is why when you move money from account that has BILLIONs in stolen assets, you take a beat, buy a laptop or phone cash from a pawn shop, then make the transaction on public wifi.
No. Just stop.
They caught this dude because he sent it to his house. Doing the transaction over public wifi doesn't matter because transactions have beginnings and ends. You have to exchange to get the goods to you.
That and there is some intelligence method to tagging the coins.
Best course of action is to trade the coins to your investigator's biggest enemy nation and trade the coin for their currency and convert through another business back into your country.
Takes some time and some overhead but you have to legitimize the cash. Petty criminals can't get away with bitcoin theft for too long because you will order a product to yourself with the stolen money.
If they had never used the wal mart card and traded it for cash they would still be on the streets.
Posted on 2/16/22 at 9:26 pm to hometownhero89
And here I thought one of the big things about crypto was it was untraceable.
Not so much apparently.
Not so much apparently.
Posted on 2/16/22 at 9:28 pm to rickgrimes
That settles it I am going back to stealing Klimts, Cezannes, and Picassos. Yeah everyone knows they are stolen but nobody cares.
Posted on 2/16/22 at 9:43 pm to rickgrimes
quote:
At the apartment, investigators seized a plastic baggie marked “burner phone,”
They couldn't remember what the phone in the plastic baggie was for? Or do they keep all of their phones in plastic baggies?
This post was edited on 2/16/22 at 9:45 pm
Posted on 2/16/22 at 9:54 pm to rickgrimes
You also won't get a netflix movie for this for a decade or so.
The method that they got them with is still too new. There is a lot of activity consolidating in this investigation from the public bitcoin exchanges to Walmart's entire gift card activity log. That takes more than one agency imo.
But there is no doubt a way to trace the coins. Why would the government be preparing to tax crypto if they couldn't?
Rule for things in the public infosphere, if someone says that something could never happen or is "untraceable", it just means that only a select few know how and that there will be some wild card engimas out there that do.
They just get brought into the fold if they play their cards right.
Look at the bug bounty guys in the software industry. Dirty secret hunters who are looking for where companies go cheap with labor budget allocation.
The method that they got them with is still too new. There is a lot of activity consolidating in this investigation from the public bitcoin exchanges to Walmart's entire gift card activity log. That takes more than one agency imo.
But there is no doubt a way to trace the coins. Why would the government be preparing to tax crypto if they couldn't?
Rule for things in the public infosphere, if someone says that something could never happen or is "untraceable", it just means that only a select few know how and that there will be some wild card engimas out there that do.
They just get brought into the fold if they play their cards right.
Look at the bug bounty guys in the software industry. Dirty secret hunters who are looking for where companies go cheap with labor budget allocation.
Posted on 2/16/22 at 11:01 pm to BuckyCheese
quote:
And here I thought one of the big things about crypto was it was untraceable.
Not so much apparently
Still don't fully get how this public misunderstanding came to be.
Bitcoin is a public ledger. That's one of its defining properties. All the math has to be published and verifiable.
There's pseudo anonymity, in that a bitcoin address has to first be tied to a person, but every transaction and fractional coin can be traced back to the very begining of the network, or at least the block when it was mined.
In that way, it's actually much less private than most traditional types of banking or money transfers.
But cashing out usually requires your bitcoin address to be tied to an actual bank or other type of account somewhere. Or giftcard, as happened here.
Posted on 2/16/22 at 11:03 pm to beerandt
quote:
Still don't fully get how this public misunderstanding came to be.
Because that is exactly how the crypto proponents promoted it.
Posted on 2/16/22 at 11:08 pm to rickgrimes
Very interesting. Thanks!
Posted on 2/16/22 at 11:11 pm to hometownhero89
quote:
You also won't get a netflix movie for this for a decade or so.
The method that they got them with is still too new. There is a lot of activity consolidating in this investigation from the public bitcoin exchanges to Walmart's entire gift card activity log. That takes more than one agency imo.
But there is no doubt a way to trace the coins. Why would the government be preparing to tax crypto if they couldn't?
Rule for things in the public infosphere, if someone says that something could never happen or is "untraceable", it just means that only a select few know how and that there will be some wild card engimas out there that do.
They just get brought into the fold if they play their cards right.
Look at the bug bounty guys in the software industry. Dirty secret hunters who are looking for where companies go cheap with labor budget allocation
That and the Feds can always go get the best and brightest from MIT and Cal Tech and offer them enough money to live comfortably and the legitimacy to ply their trade without the threat of jail. You’ll have some ideologues who turn them down, but most don’t.
This post was edited on 2/16/22 at 11:12 pm
Posted on 2/16/22 at 11:28 pm to rickgrimes
quote:
“When she’s not reverse-engineering black markets to think of better ways to combat fraud and cybercrime, she enjoys rapping and designing streetwear fashion,” according to her Forbes.com bio. Her rap lyrics include: “spear phish your password/all your funds transferred.”
lol
ETA he looks like a guido Frodo
This post was edited on 2/16/22 at 11:31 pm
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