Ilya Lichtenstein, the mastermind behind the 2016 Bitfinex bitcoin hack, was released early from US federal prison on January 2, 2026, after serving only about a year of his five-year sentence.
This clemency was granted thanks to the mitigating circumstances contained in the First Step Act, signed into law by Donald Trump.
Hackers have stolen over $10 billion worth of Bitcoin.
Lichtenstein was convicted in November 2024 of conspiracy to commit money laundering, related to the theft of nearly 120,000 BTC from the Bitfinex exchange .
At the time of writing, these assets were worth more than $10 billion, but the majority of the bitcoins had been seized by US authorities .
According to federal records, Lichtenstein is eligible for sentence reduction and early release under the First Step Act.
Simply put, this law allows prisoners to shorten their time in prison if they participate in approved educational and rehabilitation programs, particularly applicable to non-violent offenders.
As a result, Lichtenstein was transferred out of federal prison much earlier than expected.
The First Step Act, signed into law in 2018 by Donald Trump, aimed to reform federal prison trial and management policies. This law expanded the right to accumulate sentence reduction points, granted judges more discretionary power, and prioritized reintegration into the community over prolonged imprisonment.
Note that the law only applies to prisoners under the federal system, not to state prisoners. Lichtenstein's case falls under this category.
Lichtenstein's Vai in the Bitfinex hack.
Court documents and Lichtenstein's own guilty plea show that he planned and carried out the Bitfinex hack himself.
He exploited the internal authentication system, carried out over 2,000 fraudulent transactions, and transferred bitcoin to wallets under his control.
The money laundering operation spanned several years. His wife, Heather Morgan , was also convicted for helping to conceal the illicit assets. There is no evidence to suggest that any other hackers were involved with Lichtenstein in the scheme.
Will illegal activities related to crypto continue to go unpunished under Trump?
Lichtenstein's early release is part of a recent trend. A year after Donald Trump returned to the White House, many high-profile cryptocurrency cases have received pardons or reduced sentences under the Trump administration .
This includes Ross Ulbricht, who was pardoned after 10 years in prison, and Changpeng Zhao , who received clemency after pleading guilty to violating anti-money laundering (AML) regulations.
These developments have significantly altered expectations regarding sanctions and law enforcement.
Within a segment of the cryptocurrency community in the US, these decisions are fueling the view that "wrongdoing goes unpunished." Some argue that the constant practice of early release and pardons could weaken the deterrent effect on crime.
However, supporters argue that reintegration into the community and fair treatment regarding the length of imprisonment are more important than symbolic punishment.
At this time, Lichtenstein's early release continues to be a major topic of debate regarding criminal policy in the United States.
