$4.5 billion in bitcoin: US uncovers biggest-ever cryptocurrency theft

The US Justice Department announced on Tuesday that it has uncovered its largest cryptocurrency theft to date, seizing $3.6 billion in bitcoin tied to digital currency exchange Bitfinex's 2016 hack. A husband-and-wife team were arrested on money laundering charges.

Ilya "Dutch" Lichtenstein, 34, and his wife Heather Morgan Morgan, 31, were arrested in Manhattan on Tuesday morning. They spent the illegal proceeds on items ranging from gold and non-fungible tokens to a $500 Walmart gift card, according to prosecutors.

Deputy Attorney General Lisa Monaco said it was the Justice Department's largest financial seizure, emphasising that cryptocurrency is not a safe haven for criminals.

Among the charges against Lichtenstein and Morgan are conspiracies to defraud the United States and to commit money laundering. The lawsuit was filed in a federal court in Washington, DC.

US Magistrate Judge Debra Freeman set Lichtenstein's bond at $5 million and Morgan's at $3 million during their preliminary appearances in federal court on Tuesday. She demanded that their parents post their homes as security for their return to court.

The pair is accused of conspiring to launder 119,754 bitcoins stolen from Bitfinex after an attacker initiated more than 2,000 unauthorised transactions. The value of the transactions at the time was $71 million in bitcoin, but as the currency's value has grown, it's now over $4.5 billion.

An important clue may have been found in the 2017 bust of an underground digital market used to launder some of the funds. US officials said that some of the money was transferred to AlphaBay, a dark web version of eBay that allows anything to be sold.

Elliptic, a digital currency tracking company, says it is plausible that when AlphaBay shut down, it allowed authorities access to its internal transaction logs, which were linked to a cryptocurrency account in Lichtenstein's name.

Bitfinex said in a statement that the company was working with the Department of Justice to establish its rights to the bitcoin stolen.

Additionally, Lichtenstein and Morgan attempted to launder money by using a network of currency exchanges or claiming that the money represented payments to Morgan's startup, according to the DOJ.

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Both Morgan and Lichtenstein, who have dual citizenship with the United States and Russia, nodded as Freeman warned them that fleeing would result in severe penalties.

Both will be placed under house arrest, with electronic monitoring, and will not be allowed to transact in cryptocurrency pending trial, Freeman said. Later, a judge in Washington, where further hearings will be held, may set different conditions, she said.

(With inputs from agencies)