Bitfinex Hacker Out of Prison After a Year Due to President Trump's First Step Act

Ilya Lichtenstein, the individual convicted in the 2016 Bitfinex hack, was released from prison after serving just 14 months of a five-year sentence. His early release was facilitated by the First Step Act, a bipartisan prison reform law signed by President Donald Trump in 2018. Lichtenstein attributed his freedom to the act, stating he remains committed to cybersecurity according to reports.

The Bitfinex hack, which occurred in August 2016, saw 119,754 BTC stolen from the exchange, valued at $71 million at the time. Over $4.5 billion worth of Bitcoin was eventually at stake by the time of the arrests in 2022. Authorities recovered about 94,000 BTC, while 25,000 BTC remained missing.

Lichtenstein and his wife, Heather Morgan, were arrested in February 2022 and both pleaded guilty to charges related to money laundering and defrauding the United States. Morgan received an 18-month sentence and was released in October 2025 after serving approximately eight months.

Why Did This Happen?

The First Step Act is designed to reduce recidivism by promoting rehabilitation and earned time credits for inmates who participate in approved programs. Lichtenstein reportedly qualified for early release by engaging in such programming while incarcerated. The act does not discriminate by crime type, allowing non-violent offenders like Lichtenstein to benefit from early release provisions.

President Trump, known for his support of the cryptocurrency industry, has also pardoned several high-profile figures in the space, including Ross Ulbricht and Changpeng Zhao. These actions have drawn attention to the administration's approach to white-collar crime enforcement.

How Did Markets and the Public React?

Lichtenstein's release generated mixed reactions online. While some expressed support, others questioned the justice of his early freedom. An on-chain investigator posted a meme with the phrase "crime is legal," and others asked about the whereabouts of the stolen funds.

Investors have also been withdrawing from Bitcoin ETFs, with a record $4.57 billion in outflows between November and December 2025. This decline in institutional interest coincided with a 20% drop in Bitcoin's price. Analysts suggest this is not panic but rather a market in equilibrium as weaker investors exit.

What Are Analysts Watching Next?

Legal scholars and blockchain experts are watching how this precedent affects future prosecutions of digital asset crimes. While the government successfully recovered and sold billions in stolen cryptocurrency, Lichtenstein's early release raises questions about sentencing and the impact of reform laws on cybercrime cases.

The Trump administration has also shifted focus away from traditional white-collar crime enforcement, opting to prioritize immigration and violent crime. This has led to a decline in foreign bribery cases and a reevaluation of anti-money laundering policies for crypto exchanges.

As the administration continues to reshape enforcement priorities, investors and legal experts will monitor whether this approach leads to more leniency in crypto crime cases or reinforces the importance of asset recovery and victim restitution according to analysts.

The broader legal landscape for digital assets is evolving, with U.S. regulators seeking to clarify the roles of the SEC and CFTC in overseeing crypto markets. Meanwhile, international frameworks such as the UK and EU's CARF are standardizing data collection and tax reporting for crypto transactions.

Lichtenstein's release and the administration's broader approach to white-collar crime signal a shift in how digital asset crimes are prosecuted and rehabilitated in the U.S. The implications of this shift could influence future legal strategies and investor sentiment in the cryptocurrency space.