Dispatch #74: This V-Day – A Couple’s $3.6B in Stolen BTC

Feb 11, 2022 5 min read

Dispatch

In this patch of your weekly Dispatch:

Two arrests in the 2016 Bitfinex Hack
6 reasons to buy crypto, not flowers, this V-day
Cosmos’ ATOM on Nexo

The Big Idea

It's the Hackers You Don’t See Coming

Crypto Twitter absolutely exploded this week when headlines hit that the US government had seized more than 94,000 BTC – worth more than $3.6B – in conjunction with the 2016 Bitfinex hack.

In August 2016, when Bitcoin was trading around $500-$600, Biftinex was one of the biggest exchanges. So it was all the more painful when some 120,000 BTC, or roughly 36% of their volume, was stolen. Over the next few months, accusations would fly, the community would fume, but ultimately Bitifinex would work to make users whole. Not to mention the coming ICO boom which would put the hack out of everyone’s minds.

Yet still, those 120,000 BTC were gone. Fast forward to Tuesday when two suspects were arrested for conspiracy to launder the BTC. The married couple – Ilya “Dutch” Lichtenstein and Heather Morgan (Red Dead Redemption 2, anyone?) are about as far removed from the popular image of hackers as possible. He is a start-up founder that went through the prestigious Y Combinator program. She is a public speaker, founder, and former Forbes columnist who also has a surrealist rapper alternative identity called “RAZZLEKHAN” and a TikTok to match. Seems like crime is just their side hustle.

Now one thing that isn’t clear is whether they were the actual hackers, or whether they simply got the purloined coins a different way. What is clear is that they never really figured out a system to take advantage of it. Most of the BTC that they successfully laundered was through buying online gift cards. They were ultimately found out in part because they stored the text file with the private keys to more than 2,000 wallets in a cloud account.

The couple have been sent to home detention awaiting trial. It seems almost assured that the trial itself – and the subsequent Netflix original – will be watched with great interest.

For the crypto community, it’s a reminder of a very different time in Bitcoin’s history. What a world!

The Latest In…

BTC on V-day

For those of us who don’t have a crypto-laundering partner, Valentine’s Day is just around the corner and (legal) crypto might be the sexiest gift of all. A recent survey found that 33% of people would be more likely to go out with someone who owns cryptocurrencies. If this is not a good enough reason to buy crypto for your (potential) loved one(s), we give you:

6 reasons to buy Bitcoin – not flowers – this V-day

Flowers are infinite. Bitcoin has limited supply.
Flowers are tacky and obvious. Asking your crush or partner for their Nexo BTC deposit address while sipping Pinot is hot.
Flowers will wither in a few days (bad investment). Bitcoin lasts forever and tends to appreciate over the long run (good investment).
Bitcoin earns up to 8% interest on Nexo. Passsive income = active love life.
Inflation means prices for a dozen roses have jumped. Bitcoin is deflationary.
If you’d bought Bitcoin instead of lamestream V-day gifts over the past ten years, you’d now have $267,000 (6.102 BTC).

Don’t buy crappy things with Bitcoin. Just buy Bitcoin. Every year. With crypro rewards. With card. Instantly. Thank us later.

The Latest In…

Global Regulation

This week saw some fairly interesting developments on the regulation front. In the US, there were two digital asset-themed hearings. On Tuesday, the House Financial Services Committee fairly roundly rejected the Fed’s notion that stablecoin issuers needed the same regulatory regime as banks. On Wednesday, the CFTC asked for expanded powers to be the central digital asset regulator in Washington. Industry representatives like Sam Bankman-Fried testified and added their weight to the CFTC’s request.

Still, it was Russia that stole headlines this week as the country moves not towards a ban but instead towards legalization and regulation of digital assets akin to currencies. This has kicked off huge speculation about whether the Biden Administration’s forthcoming crypto executive order – which claims crypto is a matter of national security – had advanced awareness of this move.

The Latest In…

The Nexoverse

The world in which we live is huge, but most of us have only a little part of it in our lives. The same goes for crypto assets – most people have only a few of them in their portfolios. That’s why the Nexoverse keeps expanding, making it easier for you to diversify.

Nexo’s signature high yields, flexible loans, and optimized exchange are now available for every ATOM of your crypto portfolio – we’ve just listed Cosmos’ ATOM to the Nexo platform with yields of up to 11%. Buy ATOM on Nexo and get it in your wallet within seconds.

The Week’s Most Interesting Data Story

The Slow, Steady Growth of the Lightning Network

You know it’s been a big week when Cash App rolling out Lightning Network capabilities to its 70M-strong user network isn’t the most important story. Still, it’s a really big deal as it makes adoption of the Bitcoin layer 2 network much more seamlessly integrated into many users’ lives. The regulatory landscape is looking better as well, with a recent bipartisan bill looking to make an exemption on capital gains taxes for small BTC transactions. All of this comes on the heels of one of LN’s biggest events ever – widespread adoption in El Salvador. All in all, Lightning has more than tripled its capacity in the last year and it seems likely we’re still in the very early stages.