Early release of Ilya Lichtenstein under the First Step Act reshapes high-profile crypto laundering case

After serving part of his term, the convicted cybercriminal in the 2016 Bitfinex case, Ilya Lichtenstein, has been granted early release under the First Step Act framework.

Early release and future plans

Russian-American tech entrepreneur Ilya Lichtenstein, convicted of laundering Bitcoin tied to the 2016 Bitfinex hack, has been released from prison ahead of schedule under the First Step Act. He confirmed his release shortly after New Year’s Day, crediting the criminal justice reform law for the reduced time behind bars.

In a social media post, he said that the early release was made possible by his participation in approved activities and programs. Moreover, he indicated that he now plans to work in cybersecurity and used the post to thank supporters who followed the case and his sentencing.

Background of the Bitfinex-linked laundering case

U.S. law enforcement arrested Lichtenstein and his wife Heather Morgan in 2022, following a long-running investigation into Bitcoin connected to the 2016 Bitfinex breach. Prosecutors accused the couple of conspiring to conceal and launder tens of thousands of Bitcoin stolen in the attack.

At the time, authorities valued the cryptocurrency at billions of dollars, turning the matter into one of the most high-profile cryptocurrency-related prosecutions in the United States. However, the public narrative extended beyond the courtroom, as Morgan’s online persona and the scale of the digital asset seizure drew global media attention.

Sentences for Lichtenstein and Morgan

In November 2024, Lichtenstein was sentenced to five years in federal prison after pleading guilty to charges tied to the 2016 theft. The federal court accepted his admission of involvement in moving and obscuring the stolen Bitcoin across multiple platforms and transactions.

Morgan received an 18-month sentence for her role in the scheme and was released in October after serving approximately eight months, according to court records. Both defendants cooperated with U.S. authorities, and, moreover, their cooperation formed a key part of the sentencing calculus in this landmark cryptocurrency prosecution case.

How the First Step Act enabled the sentence reduction

Lichtenstein’s reduced time in custody was made possible by the First Step Act, a 2018 law signed by former President Donald Trump. The statute allows eligible inmates to earn sentence reductions by completing rehabilitation programs, educational courses, and other sanctioned activities.

The law has continued to influence outcomes in financial and crypto-related cases, particularly where defendants assist ongoing investigations or show sustained participation in reform programs. That said, critics and supporters alike are watching how its application in high-value digital asset crimes may shape future enforcement strategies.

As Lichtenstein moves into a planned cybersecurity-focused career path after his early release, his case remains a reference point for how U.S. authorities prosecute major crypto hacks and how sentencing reforms can intersect with large-scale digital asset crime.