Bitcoin Hacker Ilya Lichtenstein Freed After 14 Months—Trump’s First Step Act Delivers Crypto Justice Twist

Justice gets a blockchain update. A notorious figure in crypto's shadow economy just walked free, thanks to legislation from a previous era.

The Legal Code Fork

Fourteen months—that's the sentence served. The mechanism for release wasn't a clever exploit or a private key, but the First Step Act. The law, championed by the former administration, just executed its most controversial transaction yet in the digital asset space.

Market Sentiment vs. Court Sentencing

The case cuts to the core of crypto's relationship with traditional power structures. A hack that once shook market confidence now concludes with a statutory reduction—bypassing the expectations of many who demanded a longer lock-up. It sets a precedent, for better or worse, on how the system values digital versus traditional crime.

Regulatory arbitrage isn't just for traders anymore. The finance world watches, adjusts its risk models, and quietly notes that even the rules of justice can have unexpected slippage. A cynical take? For some in finance, this is just another calculated exit—proving that with the right legal counsel, even the most audacious positions can be unwound.

TLDR

• Ilya Lichtenstein served 14 months of a 5-year sentence for laundering 120,000 bitcoin.

• He cited the First Step Act, signed by Trump, as reason for early release.

• Lichtenstein’s wife, Heather Morgan, was also released early after an 18-month sentence.

• Authorities recovered 94,000 BTC from the 2016 Bitfinex hack; 25,000 BTC remains unrecovered.

Ilya Lichtenstein, the man behind one of the largest crypto thefts in history, has been released early from prison. He credited his release to the First Step Act, a prison reform law signed in 2018 during Donald Trump’s presidency.

Lichtenstein was convicted in connection with the 2016 hack of Bitfinex, a major cryptocurrency exchange. He and his wife, Heather Morgan, were arrested in 2022 and pleaded guilty in 2024 to charges related to laundering nearly 120,000 bitcoin.

Ilya Lichtenstein Early Release Under First Step Act

On January 1, 2026, a post appeared on Lichtenstein’s official X account stating, “Thanks to President Trump’s First Step Act, I have been released from prison early.” The post added that he remained committed to contributing to cybersecurity.

Trump’s First Step Act allows federal inmates to reduce their time behind bars through earned credits and good behavior. A former TRUMP administration official confirmed to CNBC that Lichtenstein is now under home confinement, consistent with Bureau of Prisons policy.

Thanks to President Trump's First Step Act, I have been released from prison early.
I remain committed to making a positive impact in cybersecurity as soon as I can.

To the supporters, thank you for everything.
To the haters, I look forward to proving you wrong.

— Ilya Lichtenstein (@cipherstein) January 2, 2026

Federal inmate locator data showed a scheduled release date of February 9, 2026. However, Lichtenstein was already home, suggesting he was transferred to supervised release ahead of schedule.

Heather Morgan Also Released Early

Heather Morgan, also known by her rapper name “Razzlekhan,” was sentenced to 18 months in prison. She was released after serving around eight months and shared the news on social media in October 2025.

She supported her husband’s statement and posted a photo of the two reunited, calling his return home the “best New Year’s present.” Morgan had previously thanked Trump for her own early release, referencing the same law.

Authorities say the couple laundered thousands of Bitcoin from the Bitfinex breach through various methods, including shell companies, darknet transactions, and physical gold.

Details of the Crypto Heist and Recovery Efforts

The 2016 hack of Bitfinex resulted in the theft of 119,754 BTC. At the time, the assets were worth about $71 million. At current market values, that figure exceeds $10 billion.

U.S. law enforcement recovered approximately 94,000 BTC tied to the crime. In early 2025, prosecutors filed a motion to return the recovered funds to Bitfinex.

Lichtenstein admitted to converting roughly 25,000 BTC into other digital assets and gold. Authorities are still tracking down the remainder of the stolen funds.

He has since cooperated with authorities, reportedly providing testimony against a crypto mixer used to hide the stolen bitcoin.

Trump’s Role in Crypto-Related Legal Cases

Though Trump did not issue a pardon or commutation for Lichtenstein, his administration’s reform law made the early release possible. The First Step Act remains in effect, allowing reductions for eligible non-violent offenders.

Since returning to office, Trump has pardoned several individuals connected to crypto-related offenses. These include Ross Ulbricht, founder of Silk Road; Arthur Hayes of BitMEX; and Changpeng “CZ” Zhao, the founder of Binance.

Some online users expressed support for Lichtenstein’s release, while others questioned the decision.