Ilya Lichtenstein, infamously known as the mastermind behind the 2016 Bitfinex theft, has been released from federal custody, serving just approximately 14 months of his originally imposed five-year sentence, as recent reports reveal.
In November 2024, Lichtenstein was sentenced for a money-laundering conspiracy involving the theft of over 120,000 bitcoin, a heist that ranks among the largest in cryptocurrency history.
His early release has sparked renewed discussions regarding how prison credits and reform laws influence the outcomes in cases of high-stakes cybercrime.
Bitcoin Hacker’s Release Credited To First Step Act
Through his public posts and commentary, Lichtenstein attributed his early release to the First Step Act, a significant prison-reform law that was signed into effect by former U.S. President Donald Trump in 2018.
According to reports, Lichtenstein transitioned to home confinement after qualifying for earned time credits and program participation under federal rules.
In a brief message shared on social media, he expressed gratitude towards Trump, stating his intent to contribute positively to the field of cybersecurity.
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.
To the supporters, thank you for everything. To the haters, I look forward to proving you wrong.
— Ilya Lichtenstein (@cipherstein) January 2, 2026
The Theft And The Sentence
The Bitfinex breach, as detailed by federal prosecutors, involved the theft of nearly 120,000 bitcoin, valued at around $71 million at the time of the hack, though the value surged as the market evolved.
Lichtenstein pled guilty and was sentenced to five years in a U.S. District Court on November 14, 2024. The Department of Justice described the laundering operation as being notably complex and revealed that most of the stolen funds had been recovered.
Reports indicate that Lichtenstein and his then-partner, Heather Morgan, used sophisticated methods like layered transfers, false identities, and various conversions across multiple services to mask the origins of the stolen funds.
The couple’s arrest occurred in 2022, following investigators tracing private keys and other evidence back to their accounts. Morgan, who adopted the online persona of Razzlekhan, also pleaded guilty and received a shorter sentence, contributing to an eventual early release.
The case drew significant public attention, particularly due to the remarkable recovery of assets linked to the hack.
Bitcoin Recovery, Seizures And Public Reaction
Federal filings and multiple news outlets report that over 90% of the stolen bitcoin has been recovered, marking this as one of the largest asset recoveries in U.S. history. Seizures of billions in crypto-linked assets by the government remain an ongoing administrative process.
The timing and ramifications of Lichtenstein’s early release have prompted pushback from legal experts and the public alike, raising critical questions about fairness and deterrence in cases entailing the theft of such vast amounts of property.
Featured image from Unsplash, chart from TradingView
