Bitfinex Hacker Ilya Lichtenstein Released Early Under Trump’s First Step Act Reforms

Ilya Lichtenstein, the hacker behind one of the largest crypto thefts in history, has been released from federal custody earlier than expected after qualifying for sentence reductions under the First Step Act signed into law by Donald Trump. The early release has reignited debate around crypto crime enforcement, rehabilitation, and sentencing reform in the United States.

Lichtenstein was sentenced in November 2024 for conspiracy to commit money laundering related to the 2016 Bitfinex hack, which saw nearly 120,000 Bitcoin stolen from the exchange. At current market prices, the stolen Bitcoin would be worth more than $10 billion, although the majority of the funds were eventually seized by U.S. authorities following a high-profile investigation.

According to federal records, Lichtenstein qualified for earned time credits under the First Step Act, a law enacted in 2018 to reform federal sentencing and prison policies. The legislation allows eligible federal inmates, particularly those convicted of non-violent offenses, to reduce their custodial sentences by participating in approved education, job training, and rehabilitation programs. As a result, Lichtenstein was transferred out of federal prison well ahead of his original release date.

Court filings and Lichtenstein’s guilty plea confirm that he personally orchestrated the Bitfinex breach. Prosecutors stated he exploited internal authorization systems, executed more than 2,000 fraudulent transactions, and transferred the stolen Bitcoin into wallets under his control. The laundering operation continued for years, with his wife, Heather Morgan, later convicted for helping conceal the proceeds. Authorities have found no evidence that other hackers were involved in the initial intrusion.

Lichtenstein’s release comes amid growing scrutiny of how crypto-related crimes are handled. During Trump’s return to office, several high-profile crypto figures, including Ross Ulbricht and former Binance CEO Changpeng Zhao, have received pardons or clemency. Critics argue these actions weaken deterrence and risk normalizing financial crime, while supporters maintain that proportional sentencing and rehabilitation should take priority.

As discussions around crypto regulation and enforcement continue, Lichtenstein’s early release remains a focal point in the ongoing debate over justice, reform, and accountability in the digital asset space.