Bitfinex hacker Ilya Lichtenstein gained early release under the First Step Act, highlighting shifting crypto crime enforcement dynamics.
Ilya Lichtenstein, who admitted hacking crypto exchange Bitfinex, has been released from prison early. On January 2, 2026, he confirmed his release in a public social statement on social media. Consequently, the announcement kicked up a dust cloud again around one of the most infamous cases in the history of crypto.
Trump-Era Justice Reform Enables Early Release
Lichtenstein attributed his early release to the First Step Act. This bipartisan criminal justice reform law was signed by President Donald Trump in 2018. The legislation is primarily aimed at reducing sentences, rehabilitation incentives and increasing eligibility for early release.
In an X post, Lichtenstein directly thanked President Trump for He said the law enabled him to leave prison earlier than expected. Additionally, he said that he has intentions of contributing positively to cybersecurity efforts moving forward.
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Lichtenstein was sentenced in November 2024 to 5 years in the federal prison. The sentence came after his guilty plea to conspiracy charges. These included conspiracy to commit money laundering and conspiracy to defraud the United States.
The charges were over the Bitfinex hack of 2016. During that breach, close to 120,000 Bitcoin were stolen. At the time, the stolen bitcoin was worth close to $71 million.
By the time of Lichtenstein’s arrest in February 2022, that sum stood at more than $4.5 billion. At today’s prices, the figure exceeds $10 billion. Bitcoin is now trading around $89,000, thereby enhancing the historical importance of the case.
Prosecutors said Lichtenstein did the hacking himself. Afterwards, he collaborated with his wife to launder money. They leveraged sophisticated methods that included the use of mixers, wallets, and layering.
Case Highlights Raise Compliance and Market Questions
Heather Morgan, Lichtenstein’s wife, played a lesser role, according to prosecutors. Known publicly as “Razzlekhan,” she was given an 18-month sentence. Morgan was released in October 2025 on similar terms.
The First Step Act makes it possible for eligible inmates to earn time credits. These credits by rehabilitation programs and cooperation. Reports show that Lichtenstein helped federal authorities in other crypto-related investigations.
Notably, he gave testimony against an alleged operator of a crypto mixer service. Such cooperation often has an impact on early release eligibility. Therefore, involvement in enforcement efforts seems to have materially affected sentencing outcomes.
As part of his sentence, Lichtenstein is required to spend 3 years in supervised release. During this time, his actions will continue to be monitored. Accordingly, his professional involvement is going to be subjected to regulatory and legal scrutiny.
The case sends mixed signals to the crypto market. On one hand, it is the effective law enforcement recovery and prosecution. On the other hand, shorter periods of incarceration make deterrence expectations more difficult.
Institutional compliance teams keep a close track of such results. Shorter, effective sentences affect the risk assessments in financial crimes. Therefore, enforcement modelling is increasingly taking into account the incentives for cooperation, as well as the flexibility of reform-driven sentencing.
The Bitfinex case has remained as one of the largest breaches ever to take place in the history of crypto. It transformed the security practices of exchange and blockchain analytics development. Additionally, it helped accelerate the regulatory focus on crypto laundering mechanisms.
Ultimately, Lichtenstein’s release represents changing justice priorities in America. Rehabilitation, cooperation, and reform now affect outcomes more visibly. For crypto markets, the certainty of enforcement is still complex and ever-evolving.
Source: https://www.livebitcoinnews.com/bitfinex-hacker-ilya-lichtenstein-freed-early-under-trump-era-first-step-act/
