February 09, 2022
Happy Wednesday, Fintech Deals readers. Can you believe we're halfway through this week?
Situational awareness: Crowdfunding site GoFundMe is at the center of a First Amendment maelstrom after taking down a campaign formed to raise money for an anti-vaccine-mandate protest in Canada.
- And yes, somehow, Elon Musk is a part of this story.
1 big thing: Bitfinex's Bonnie & Clyde
Imagine you're a crypto criminal who has just made it big by nabbing tens-of-thousands of Bitcoin in one of the most high-profile virtual exchange hacks in history. With multiple global cyber enforcement units on your trail, you'd lie low. Maybeeee even fake your own death.
Yes, but: That's not how the alleged Bonnie and Clyde of the 2016 Bitfinex hack played it. One of them has a dubious career as an amateur rapper and publicly displayed a life of wealth.
Driving the news: On Tuesday, the Department of Justice announced that it had seized over $3.6 billion in cryptocurrency related to the 2016 Bitfinex hack, arresting a couple in the process for conspiring to launder.
Of note: Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, weren't hiding out in Russia or China. Instead, the two were highly active in U.S. tech and cultural circles, with Morgan gaining heavy airtime yesterday for not-s0-catchy music released as "Razzlekhan."
- Lichtenstein, according to his LinkedIn, co-founded a Y-Combinator startup known as MixRank. As a Forbes contributor, Morgan — ironically — authored a piece on how to "protect your business from cybercriminals."
- The duo weren't always clever when it came to online security — leading in part to the seizure. Many crypto holders, out of an abundance of caution, store the keys to their digital wealth offline rather than online or with a third-party.
- Their private keys, however, were found in an encrypted cloud-storage account that law enforcement obtained via search warrant, the complaint states. A spreadsheet tracking the funds was also found in the storage.
Zooming out: Parts of the hack were undoubtedly sophisticated as the duo moved funds through an intricate web of accounts. But that hack occurred in 2016. Even more sophisticated laundering practices and technologies have since emerged.
- Think privacy-focused wallets like Wasabi, as Tom Robinson, chief scientist at blockchain analytics firm Elliptic, tells Lucinda—technologies regulators are now grappling with how to oversee.
- The DOJ notably did not accuse the couple of the actual hack.
- But, with this new announcement, the enforcement officials are emphasizing their technological know-how and ability to go after criminals — even as the criminals grow smarter.
Bottom line: Don't launch a rapping career if the feds are on your trail. Twitter will find you.