Ilya Lichtenstein is released from federal prison in the United States after serving 14 months for Bitfinex bitcoin theft

Ilya Lichtenstein, known for his role in the 2016 Bitfinex hack, has been released from federal custody after serving roughly 14 months of a five-year sentence. The news comes amid ongoing discussions about prison credits and reform laws in cases involving high-value cybercrime.

Lichtenstein was originally sentenced in November 2024 for a money-laundering conspiracy connected to the theft of nearly 120,000 bitcoin, one of the largest crypto thefts in history.

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First Step Act credited for early release

In public statements and social media posts, Lichtenstein attributed his early freedom to the First Step Act, the federal prison reform law signed by former President Donald Trump in 2018.

Under federal rules, inmates can earn time credits for program participation and good behavior, which can lead to home confinement. Lichtenstein took advantage of these provisions and expressed a desire to work in cybersecurity moving forward.

On X, he posted:

“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.”

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The 2016 Bitfinex theft and sentence

The 2016 Bitfinex hack involved about 120,000 bitcoin, valued at around $71 million at the time, a figure that later soared as the crypto market grew. Lichtenstein pleaded guilty in U.S. District Court and received a five-year sentence.

Federal prosecutors described the laundering operation as highly sophisticated. The couple behind the crime, Lichtenstein and Heather Morgan (aka Razzlekhan), used layered transfers, fake identities, and multiple conversions to obscure the source of the stolen funds.

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Arrest and evidence

Lichtenstein and Morgan were arrested in 2022 after federal agents traced private keys and other digital evidence to their accounts. Morgan also pleaded guilty and received a shorter sentence, reportedly benefiting from early release as well.

The case attracted widespread attention due to the size of the hack and the unusual recovery of stolen assets.

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Bitcoin recovery and public reaction

Investigators managed to recover over 90% of the stolen bitcoin, and the government seized billions in crypto-linked assets, marking one of the largest digital asset recoveries in U.S. history.

While the recovery was significant, many legal experts and members of the public have criticized the optics of Lichtenstein’s early release. Some argue that cases involving billions in stolen property pose unique challenges for deterrence and fairness.

Bitcoin, at the time of reporting, is trading at around $91,256.

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What’s next?

Lichtenstein’s early release raises questions about how federal prison reforms affect cybercrime sentences, especially when enormous sums are involved.

Authorities continue to manage the custody and sale of recovered assets, while Lichtenstein plans to transition into cybersecurity work. The case serves as a high-profile example of the intersection between digital crime, legal reform, and public perception.

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