• Bitfinex hacker Ilya Lichtenstein was released after about one year under the First Step Act.
• He planned and carried out the 2016 hack, stealing nearly 120,000 BTC.
• The move adds to concerns that crypto crime faces weaker deterrence.

Ilya Lichtenstein, the man behind the 2016 Bitfinex bitcoin hack, has been released early from US federal prison on January 2, 2026, after serving roughly one year of a five-year sentence. 

The release was granted following sentence reductions tied to Donald Trump’s First Step Act. 

Sponsored

The Hacker Who Stole Over $10 Billion in Bitcoin

Lichtenstein was sentenced in November 2024 for conspiracy to commit money laundering, linked to nearly 120,000 BTC stolen from the Bitfinex exchange. 

At today’s prices, that haul is worth more than $10 billion, though most of the funds were later seized by US authorities.

Federal records indicate Lichtenstein qualified for time credits and early release provisions under the First Step Act. 

In short, the law allows inmates to shorten custodial sentences by participating in approved rehabilitation and education programs, particularly for non-violent offenses.

As a result, Lichtenstein was transferred out of federal custody well ahead of schedule.

Sponsored

Signed in 2018 by Donald Trump, the First Step Act reformed federal sentencing and prison policy. It expanded access to earned time credits, increased judicial discretion, and emphasized rehabilitation over prolonged incarceration.

Importantly, it applies only to federal inmates, not state prisoners. Lichtenstein’s conviction fell squarely within that scope.

Lichtenstein’s role in the Bitfinex hack

Court filings and Lichtenstein’s own guilty plea show he planned and executed the Bitfinex breach himself. 

Sponsored

He exploited internal authorization systems, initiated more than 2,000 fraudulent transactions, and moved the bitcoin into wallets he controlled.

The laundering phase lasted years. His wife, Heather Morgan, was convicted for assisting in concealing the funds. No evidence points to other hackers involved in the intrusion.

Sponsored

Crypto Offense Continues to Go Unpunished Under Trump?

Lichtenstein’s release follows a broader pattern. One year into Trump’s return to office, high-profile crypto cases have seen clemency. 

These include Ross Ulbricht, pardoned after a decade in prison, and Changpeng Zhao, who received a pardon after pleading guilty to AML violations.

Together, these moves have reshaped expectations around enforcement.

Within parts of the US crypto community, these decisions are fueling a “crime is legal” narrative. Critics argue repeated early releases and pardons risk undermining deterrence. 

However, supporters counter that rehabilitation and proportional sentencing matter more than symbolic punishment.

For now, Lichtenstein’s early release stands as the latest flashpoint in that debate.

Disclaimer