2 January 2026 marks a date set to reignite fierce controversy in the world of digital finance and American criminal justice.
Ilya Lichtenstein, the man who orchestrated one of the largest cryptocurrency thefts in history, has been released early from a US federal prison. Despite a five-year sentence imposed in November 2024, Lichtenstein has only served about one year of actual imprisonment.
The Role of the First Step Act and Sentence Reductions
Lichtenstein's early release was made possible by the provisions of the First Step Act, the prison reform signed by Donald Trump in 2018. This bill, designed to reform federal sentencing policies, places a strong emphasis on rehabilitation over prolonged incarceration, especially for non-violent crimes.
Thanks to President Trump's First Step Act, I was released early from prison," he stated on X
Thanks to President Trump's First Step Act, I have been released from prison early.
- Ilya Lichtenstein (@cipherstein) January 2, 2026
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.
According to federal records, Lichtenstein benefited from so-called 'time credits' earned through participation in approved educational and rehabilitation programmes. In fact, the First Step Act allows federal inmates to shorten their custodial periods by demonstrating exemplary conduct and a concrete commitment to social reintegration.
Because Lichtenstein's crimes fell under federal and not state jurisdiction, he was able to fully access these benefits, leaving prison well ahead of his original schedule.
The $10-billion hit on Bitfinex
Lichtenstein's court case has its roots in 2016, when he managed to breach the security systems of the Bitfinex exchange. Evidence presented in court and his own confession revealed a meticulous plan of action: exploiting vulnerabilities in internal authorisation systems, Lichtenstein initiated over 2,000 fraudulent transactions, moving almost 120,000 Bitcoin (BTC) into wallets under his direct control.
At the time of the theft, the value of the loot was substantial, but with the explosion of today's market prices, that loot has reached the astronomical figure of over $10 billion.
Although the vast majority of the funds were subsequently seized by US authorities, the scale of the crime remains unprecedented. Lichtenstein acted as the lone mastermind in the cyber-intrusion, while his wife, Heather Morgan, was convicted of assisting him in the complex money laundering operations that lasted for years.
Clemency and controversy: the Trump administration's new course
Lichtenstein's release is part of a broader political context. One year after Donald Trump's return to the White House, there is a change of course towards the big crypto-related cases.
Lichtenstein is not the only excellent name to benefit from this new climate: recent cases include Ross Ulbricht, pardoned after a decade behind bars, and Changpeng Zhao, former CEO of Binance, who received a pardon after pleading guilty to anti-money laundering (AML) violations.
These decisions have generated a deep rift in public opinion. Within the US cryptographic community, many critics denounce what they call the 'crime is legal' paradigm, arguing that early releases and presidential pardons risk undermining the deterrent power of the law, sending a message of impunity to cyber-criminals.
On the other hand, supporters of reform emphasise that justice should not be purely punitive. According to this view, if a prisoner demonstrates rehabilitation and his sentence is proportional to the non-violent crime committed, early release represents the success of the correctional system. While the debate rages on, Ilya Lichtenstein leaves federal custody, becoming a living symbol of an American justice system undergoing profound transformation.
