When anonymous hackers infiltrated the cryptocurrency exchange Bitfinex in 2016, it shook the nascent world of digital currency and prompted speculation about who might have stolen what was then $71 million in Bitcoin.

But unlike traditional financial transactions, Bitcoin trades are publicly visible moving the coins risked revealing who was behind the heist. And so for six years, as the value of Bitcoin soared, the loot sat in plain sight online as tiny fractions of the giant sum occasionally disappeared in a blizzard of complex transactions.

It was as if a robbers getaway car was permanently parked outside the bank, locked tight, money still inside.

And then, this month, the car sped off.

In the strange and sometimes shadowy world of cryptocurrency, it was as if the earth shook. In the years since the Bitfinex hacking, crypto had exploded into the mainstream, and the theft had become notorious: a bounty worth over $4 billion. At last, it seemed, the hackers had emerged from hiding.

But it was not the hackers who had moved the stolen Bitcoin it was the government, which had seized it as part of an investigation into two New York City entrepreneurs: one a little-known Russian migr and tech investor; the other, his wife, an American businesswoman and would-be social media influencer with an alter ego as a satirical rapper named Razzlekhan.

Charged with conspiring to launder billions of dollars in Bitcoin, the couple, Ilya Lichtenstein, 34, and Heather Morgan, 31, were accused of siphoning off chunks of the purloined currency and trying to hide it in a complex network of digital wallets and internet personas. If convicted of that and a second conspiracy count, they could face up to 25 years in prison.

The arrests shocked some acquaintances of the couple, whose goofy online lives appeared at odds with prosecutors description of them as sophisticated criminals with stacks of foreign currency, multiple fake identities and dozens of encrypted devices stashed in their Manhattan apartment. As they awaited a Monday court hearing in Washington on whether they should be freed on bail, Mr. Lichtenstein and Ms. Morgan remained the subject of a confounding question: Could they really be at the center of one of cryptocurrencys enduring mysteries?

The charges were a watershed in the evolving regulation of digital currency and, to some, a step forward in the governments ability to trace its illegal laundering.

The crypto space has always been seen as like a safe haven for criminals, said Christopher Tarbell, a former F.B.I. special agent who helped lead the investigation into the Silk Road online marketplace for illegal drugs and other illicit goods.

Were now seeing that law enforcement has the knowledge, tools and skills to provide some accountability in what was the new wild, wild west of cybercrime, Mr. Tarbell said.

Officials have not said whether they believe Mr. Lichtenstein and Ms. Morgan were directly involved in the Bitfinex breach. But their arrests laid bare the murky fringes of crypto culture, where the line between sophisticated virtual finance ventures and infantile online gags is razor thin and constantly shifting.

Sandra Ro, who leads the Global Blockchain Business Council, an industry association that advocates for the adoption of cryptocurrency markets, said the arrests play into the narrative that the crypto community is populated by dubious and fringe characters, which is not the case.

There are adults in the room, Ms. Ro said, who are building real products and services to grow a multitrillion-dollar industry responsibly.

For many who follow the industry, Mr. Lichtenstein and Ms. Morgan came off as familiar characters in a realm where fortune favored the boldest investors, the flashiest personalities got rich fast and a single, obtuse tweet could rattle entire markets.

Almost immediately after the arrests, the hyperactive community that discusses cryptocurrency on social media and message boards began to pore over Ms. Morgans bizarre digital trail. Her videos little-watched before she was charged were suddenly being shared widely.

In one, apparently recorded at brunch, Ms. Morgan marvels at the size of her plate of pancakes, sneers, sticks out her tongue and wags her fingers before announcing that she is offering a commentary about consumerism and social medias superficial nature.

The Bitfinex hacking was the stuff of legend, but Mr. Lichtenstein and Ms. Morgan hardly appeared to be suave, or subtle, digital cat burglars or the tip of a grand conspiracy.

Sharing the pancake video, one typically irreverent Twitter account that comments on cutting-edge financial markets in an all-caps parody of the Incredible Hulk captured a widely expressed reaction to the revelation: OK. THE HACKERS ARE NOT CIA. THEY ARE IDIOTS.

Ms. Morgan was a regular contributor to Forbes and Inc., writing columns that advised her fellow entrepreneurs on how to protect their digital currency, and recommending rapping as a form of self-care, as she did through her alter-ego, Razzlekhan (Genghis Khan, but with more pizazz, her website says).

Those who know Ms. Morgan said her social media stunts were part of an elaborate act to confront social pressures.

She works to free herself from a lot of the scripts that are embedded in our society, said Morgan Brittni Sonnenfeld, who said she is Ms. Morgans cousin. I admire her for that, she has a lot of strength. Ms. Sonnenfeld acknowledged that news coverage of Ms. Morgan had made her sound a bit crazy, and she wondered whether Ms. Morgans persona may have drawn the authorities to her.

I wonder, why do they want people looking at her? Who are we not looking at? Why are they choosing this specific person? Ms. Sonnenfeld said.

The arrests also surprised Ms. Morgans friends, who described her as a disarmingly honest colleague in an industry defined by cutthroat competition.

It is very jarring to think someone so open and vulnerable with people would have secrets, one friend, Nora Poggi, said. She is someone I care a lot about.

In court records, the Justice Department describes the trail that it says led investigators to Mr. Lichtenstein and Ms. Morgan.

In January 2017, five months after hackers hit Bitfinex, a portion of what they stole was moved in small complex transactions into accounts that the couple controlled, according to a criminal complaint filed in federal court in Washington.

This shuffling, which created a voluminous number of transactions, appeared to be designed to conceal the path of the stolen Bitcoin, the complaint says.

Mr. Lichtenstein and Ms. Morgan were budding tech entrepreneurs at the time. Mr. Lichtenstein specialized in cryptocurrency and coding, according to his LinkedIn profile, and Ms. Morgan had returned from the Middle East, where she focused on currency markets.

Anirudh Bansal, the couples lawyer, declined a request for comment. But in court papers, he has made it clear that he believes the governments case is weak and relies on unsupported, conclusory leaps.

Beyond Ms. Morgans highly public persona, little is known about the couple. They have been together for seven years and married for three, Mr. Bansal told a federal magistrate judge in Manhattan on Tuesday during arguments over whether the couple should be released on bail.

In saying that his clients were not a risk to flee, Mr. Bansal offered some personal details about them.

Mr. Lichtenstein, Mr. Bansal said, came to the United States from Russia when he was 6. His father works for the housing authority of Cook County, Ill., and his mother is a biochemist at Northwestern University.

A glossary. Cryptocurrencieshave gone from a curiosity to a viable investment, making them almost impossible to ignore. If you are struggling with the terminology, let us help:

Bitcoin. A Bitcoinis a digital token that can be sent electronically from one user to another, anywhere in the world. Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved.

Blockchain. A blockchainis a database maintained communally, that reliably stores digital information. The original blockchain was the database on which all Bitcoin transactions were stored, but non-currency-based companies and governments are also trying to use blockchain technology to store their data.

Coinbase. The first major cryptocurrency company to list its shares on a U.S. stock exchange, Coinbase is a platform that allows people and companies to buy and sell various digital currencies, including Bitcoin, for a transaction fee.

Crypto finance. The development of cryptocurrencies spawned a parallel universe of alternative financial services,known as Decentralized Finance, or DeFi, allowing crypto businesses to move into traditional banking territory, including lending and borrowing.

Ms. Morgan, who was born in Oregon, runs a consulting firm that employs up to 30 freelance writers at a time, Mr. Bansal said. Her father served in the U.S. military and is a retired biologist. Her mother is a high school librarian.

Mr. Lichtensteins family had immigrated to the United States to flee religious persecution and there was no chance he would return to Russia, Mr. Bansal said.

In a later letter, another of the couples lawyers wrote that Ms. Morgan had frozen several of her embryos at a hospital in New York in anticipation of starting a family.

The couple would never flee from the country at the risk of losing access to their ability to have children, the lawyer wrote.

At the hearing, a prosecutor, Margaret Lynaugh, said in opposing bail for Mr. Lichtenstein, a dual citizen of the U.S. and Russia, that he had an active Russian passport and the means and intent to flee.

The judge ordered that the couple be freed on multi-million-dollar bonds, but at the governments request, a federal judge in Washington blocked their release and scheduled the hearing on Monday.

In court papers, the government has called Mr. Lichtenstein and Ms. Morgan highly sophisticated criminals. Prosecutors said they believed the couple had significant additional assets, including hundreds of millions of dollars in virtual currency stolen from the Bitfinex exchange that had not been recovered, as well as access to numerous fraudulent identities bought on the so-called darknet, a hidden portion of the internet used for illicit transactions.

The government says the couple had also established financial accounts in Russia and Ukraine, and appeared to have been setting up a contingency plan for a life in one of those countries before the pandemic.

As evidence of what they depicted as a complicated money-laundering scheme, prosecutors say in a court filing that they had traced stolen cryptocurrency to more than a dozen accounts held in the true names of the couple or their businesses.

The government says in the court filing that when agents executed a search warrant at the couples Lower Manhattan apartment on Jan. 5, they recovered more than 50 electronic devices, including a bag labeled burner phone, and more than $40,000 in cash. Many of the devices were partially or fully encrypted or otherwise password protected, the court filing says.

In Mr. Lichtensteins office, agents found two hollowed-out books whose pages appeared to have been cut out by hand to create secret compartments, the filing says. (The compartments were empty.)

And then there was the couples cat.

As agents were about to begin the search, Ms. Morgan and Mr. Lichtenstein said they would leave their apartment, but wanted to take their cat, the filing says. The agents allowed Ms. Morgan to retrieve the cat, which was hiding under the bed.

But as Ms. Morgan crouched by the bed and called to the cat, she positioned herself next to a night stand that held one of her cellphones, the filing says. She then reached up and grabbed the phone, and repeatedly hit the lock button in what prosecutors say was an apparent effort to make it harder for investigators to search the phones contents.

The agents had to wrest the phone from Ms. Morgans hands. Court records provided no further information about the cat.

Reporting was contributed by Chelsia Rose Marcius, Kate Conger, Sheelagh McNeill and Ed Shanahan.

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Inside the Bitcoin Laundering Case That Confounded the Internet - The New York Times

No one doubts that Bitcoin is still the most important cryptocurrency, and it may stay that way for a long time, but it is in a complicated moment due to different factors.

Last weekend Bitcoin held above the $41,500 resistance level over the weekend after it was unable to break the $46,000 resistance level.

Like currency markets around the world, cryptocurrencies are suffering the ravages of fears of an armed conflict in Ukraine, not to mention doubts about Federal Reserve rate hikes leaving investors.

In addition, after falling to an annual low of $33,000 in January, the Bitcoin reached monthly highs of $46,000, which was reached at the end of 2021, but the strength shown in February is not consolidated.

For now, the Bitcoin has traded above $43,500, even approaching $44,000 at times, but it needs a series of positive news for it to maintain that upward effect.

Some cryptocurrency experts are confident that Bitcoin will return to $50,000 before the end of February, although other scenarios point to a fundamental bearish high of $44,000 before it begins to mark down.

Even several major cryptocurrency assets suffered a drop of more than 20% in the last week, even with Bitcoin's apparent resilience.

It is important to consider that the Relative Strength Index (RSI) levels, a price chart indicator that calculates the magnitude of price changes, showed readings of 39 on Monday, suggesting the end of the weekend decline.

Readings above 70 suggest that an asset is "overbought" and could undergo a correction, while below 30 implies "oversold" where assets may recover.

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Bitcoin price: How's the digital asset starting this week? - Marca English

Bitcoin (BTC) mining generates a lot of waste heat. As energy prices spiral out of control in Europe, miners have come up with creative ways of recycling the heat generated by solving valid Bitcoin blocks.

Whereas a miner isdrying wood from a local timber millin Norway, across the North Sea in the Netherlands, a miner is heating greenhouses to grow produce and bloom Bitcoin flowers.

In a win-win partnership between a Dutch farmer and a Bitcoin miner, Bitcoin Bloem mines Bitcoin and cultivates flowers in greenhouses in the province of North Brabant, southeast of Rotterdam.

It works like this: Bitcoin Bloem mines BTC in the farmers greenhouses and pays the electricity bill; the farmer gets free heat to grow their crops. Consider the Bitcoin flowers that Bitcoin Bloem sells the cream in the coffee to the climate-friendly operation.

Bert de Groot, founder of Bitcoin Bloem, told Cointelegraph that the operation reduces the use of natural gas in the greenhouse growing process, as Bitcoin miner heat replaces polluting gas heaters.

Plus, using BTC miners for heating saves both the farmer and Bitcoin Bloem a pretty penny. For the farmer, miner heat makes sense because natural gas prices have skyrocketed. For Bitcoin Bloem, it gets access to cheaper electricity.

When asked whether the Netherlands could welcome more BTC miners in the future, de Groot said the country could be an optimal location for Bitcoin mining.

Related: Canadian city plans to supply residents heat using Bitcoin mining

He added that the Texas solution would be interesting to roll out in the Netherlands. The Texas solution revolves around load balancing and working in tandem withlocal authorities to regulate power demand.

Currently, the Netherlandsremains a relatively strict European countryabout cryptocurrency activities. However, grassroots movements such as Dominos franchisesoffering salary top-ups in BTCand Dutch football clubssupporting Satoshis invention are building momentum.

The flowers that Bitcoin Bloem sells are appropriately named White Rabbit and Blue Pill. In a jibe at the energy fear, uncertainty and doubt thatis often slung at Bitcoin, the website jokes, We offer you flowers for your Bitcoin because your bitcoin is a waste of energy too.

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Flower powered: Bitcoin miner heats greenhouses in the Netherlands - Cointelegraph

It is not the first time the U.S. Securities and Exchange Commission (SEC) rejected proposals for a Bitcoin spot exchange-traded product (ETP), but efforts continue to be made by different financial institutions. The recent attempt made by Cboe BZX Exchange on Jan. 25 to list the Fidelity Wise Origin Bitcoin Trust as a Bitcoin ETP has also failed.

The SEC letter published on Feb. 8 pointed out that the exchange has not met its burden to demonstrate the fund is designed to prevent fraudulent and manipulative acts and to protect investors and the public interest.

Although proposals of Bitcoin spot ETPs have never been approved by the SEC and such products are not available in the U.S. market, they do exist in the European market. By investigating the prices of ETPs traded in the European market, one could gain a good insight into whether fraudulent and manipulative acts are possible.

To investigate whether the SECs concerns of fraudulent and manipulative acts are justifiable, this article will compare the historic prices of three European listed ETPs and the Bitcoin spot price history from 18 exchanges to see if there are any significant price disparities that could induce market manipulation.

There were two major concerns raised by the SEC from a technical perspective towards BZX Exchanges proposal:

(1) No data or analysis was provided to support the argument that arbitrage across the Bitcoin platforms helps to keep global Bitcoin prices aligned with one another, thus hindering manipulation and eliminating any cross-market pricing differences. There is no indication of how closely Bitcoin prices are aligned across different Bitcoin trading venues or how quickly price disparities may be arbitraged away.

(2) The exchange does not demonstrate the proposed methodology for calculating the index would make the proposed ETP resistant to fraud or manipulation. Specifically, the exchange has not assessed the possible influence that spot platforms not included among the indexs constituent Bitcoin platforms would have on Bitcoin prices used to calculate the index.

To see if the above issues exist and whether manipulative acts are possible within the ETPs listed in the European markets, historic data (from Google Finance) of the following three ETPs listed in SIX Swiss Exchange are compared with Bitcoin spot price from exchanges (data from Cryptowatch).

As described in the proposal by BZX Exchange, the index calculation will be based on the volume-weighted median price (VWMP) in the previous five minutes from five exchanges Bitstamp, Coinbase, Gemini, itBit, and Kraken.

In a very simple and basic attempt to replicate the index calculation with best efforts, the daily spot prices from four out of the five aforementioned exchanges Bitstamp, Coinbase, Gemini and Kraken are used.

Since the Bitcoin ETP price scale is often different from the Bitcoin spot price, the daily percentage change (or daily return) is used in all charts for easy comparison of price disparities.

The graphs below show the daily return comparison between each of the three ETPs and the aggregated Bitcoin spot price, calculated from the four exchanges using the volume-weighted median method.

The left-hand-side scatter plot shows how closely the ETP price is aligned to the spot price. If the two are perfectly aligned, all the points should fall onto the blue dash line. The right-hand-side plot compares the daily percentage return and also plots the difference between the two.

Comparing WisdomTree ETP and the spot, although most of the points in the scatter plot cluster within the +/-5% radius, there are certainly some significant price disparities outside this radius. One day during the three-month period had the daily return difference (blue dash line) between the ETP and spot price reached above 10%.

It is also interesting to note that the volatility of ETP price percentage change tends to be higher than the spot. The graph below comparing Coinbase Physical Bitcoin (blue line) and Bitcoin spot (pink line) shows the percentage change of the former could reach nearly 15% whereas the latter only went past 10%.

Similarly, 21Shares Bitcoin ETP price is also more volatile than the spot and the correlation with the spot is lower (62%) than that of WisdomTree (67%) and Coinbase Physical Bitcoin (66%).

The price comparisons shown above suggest cross-market pricing differences between the ETP price and the Bitcoin spot price from exchanges exist. The price disparities have not been arbitraged away quickly enough to prevent manipulative acts.

However, it is important to highlight that this is only a very rough comparison using the daily data. The difference in prices might be due to the different cut-off times each ETP uses to calculate the end-of-day price, i.e., exchange-traded products do not trade 24-hours like the crypto spot price; they trade during the Exchanges regular trading hours from 9:30 am to 4:00 pm.

Also, in practice, a much higher frequency will be used to calculate the index price, i.e., the BZX Exchange proposal suggests calculating the index price using the previous five minutes data from five exchanges and updating the Intraday Indicative Value (IIV) per share every 15 seconds. The analysis done here is using only daily aggregated data to proxy the index price and might not reflect the actual index price using high-frequency data.

It is worth pointing out that although price disparities can be observed between ETPs and spot price using daily data, price discrepancies between the ETPs, themselves, are much smaller as shown in the graphs below.

It is very likely that these ETPs listed in the same exchange all use the same frequency and cut-off time to calculate their prices; hence, the price differences are smaller among themselves. This reinforces the point that the price disparities between the Bitcoin ETP and Bitcoin spot price might come from the frequency and the cut-off time used in the methodology of ETP index calculation, which can not be replicated exactly the same in this analysis.

In the first point of concern mentioned at the beginning of the article, the SEC also asked how closely Bitcoin prices are aligned across different Bitcoin trading venues.

Based on the cross-platform BTC/USD data collected from 18 exchanges from Cryptowatch, the exchange price disparities are very small. As an example to show how closely the prices align to each other, Coinbase, Gemini and Bitstamp are compared against Kraken and the correlation between each pair is very close to 100%.

The SEC is also concerned about the possibility of price influence and manipulation from spot platforms that are not included among the indexs constituents. If Bitcoin prices from other platforms are very different from the four constituent platforms, Bitstamp, Coinbase Gemini and Kraken market manipulators might seek to exploit the disparities for profit.

To see if price disparities exist between the four platforms and others, the bottom right graph below compares the aggregated volume-weighted median price from the four platforms with the aggregated price from all 18 exchanges. The nearly perfectly aligned line shows there is almost no difference between the two. The spot platforms do not have large price disparities and the prices are closely aligned across different Bitcoin trading venues.

With such great similarity in daily prices, manipulative acts will be very difficult across exchanges. However, price manipulation could still happen intraday but its beyond the reach of this analysis due to lack of high-frequency intraday data.

Based on the analysis from the three SIX Swiss Exchange listed ETPs prices and the Bitcoin spot prices from 18 exchanges, it seems price disparities do exist between ETP and spot. This could potentially lead to manipulative acts towards ETP index price, even though the applicants frequently claimed the sophisticated index calculation methodology prevents such acts.

The SECs concerns about fraud and manipulation seems to be justified based on the price disparities between these European listed ETPs and the spot price. That said, the difference could be caused by the daily data frequency used in this analysis, which is different from the high-frequency data used in practice.

On the contrary, no significant price disparities can be found among different Bitcoin trading venues. Although the spot markets from these venues are more decentralied and less regulated than traditional stock exchanges, malicious price manipulation across these platforms could still be very difficult.

Given the large number of centralized and decentralized, regulated and unregulated crypto exchanges out there, it is extremely hard to prove price efficiency and similarity across all of them. The U.S. ETP applicants still have a long way to go to convince the SEC.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Heres why the SEC keeps rejecting spot Bitcoin ETF applications - Cointelegraph

One of the first problems new investors run into is where they should invest. With thousands of publicly traded companies, there's no shortage of companies to choose from, and with the emergence of cryptocurrencies over the last decade, the options have expanded even more.

Between the S&P 500 and Bitcoin (CRYPTO:BTC), here's what I think is the better first investment.

Image source: Getty Images.

The S&P 500 is an index that consists of the 500 largest companies in the U.S. by market cap. S&P 500 index funds are funds put together to mirror the index, and different brokerages put together their own funds. If you want to invest in an S&P 500 fund, you have multiple options, such as the Vanguard S&P 500 ETF, SPDR S&P 500 ETF Trust, iShares Core S&P 500 ETF, and more.

The companies in the S&P 500 cover almost every industry you can think of, making it ideal because it gives investors instant diversification. Instead of having to invest in individual companies in varying industries one by one -- and increasing your risk of making a bad investment -- you can just invest into an S&P 500 fund and be instantly invested in top players in respective industries.

Bitcoin is a cryptocurrency that was released in 2009 that has since gone on to be the world's most popular and biggest cryptocurrency by market cap. Bitcoin was revolutionary because it was the first decentralized currency, meaning no central power (like the Federal Reserve) controlled it.

As of February 9, 2022, Bitcoin's price has increased by over 13,570% since its inception, making it one of the most lucrative investments of all time in any asset. Unfortunately, those historical gains don't automatically mean investors can expect similar increases in the future.

If you're just beginning to invest, one of the last things you'll likely want to do while you're still learning and getting used to how markets work is to put your money into an investment that will inevitably experience extreme volatility. By no means is the stock market exempt from volatility, but the S&P 500 has shown to be a lot more stable in the long run.

Another aspect of investing that you'll miss out on if you choose Bitcoin over the S&P 500 is dividends. Along with an increase in asset price, dividends are the other primary way investors make money from their investments. If you invest a set amount into Bitcoin and the price doesn't increase, you don't make any money. If you invest a set amount into the S&P 500 and the price doesn't increase, you should still make money from dividend payouts.

In 2021, the Vanguard S&P 500 ETF had a 1.59% dividend yield. If that dividend yield stayed the same and you invested $10,000 into the fund without ever contributing another dollar, you would've earned over $3,700 in dividends over 20 years -- even if the fund's stock price didn't increase. Being paid for simply holding an investment is not a perk you currently get with Bitcoin.

While an S&P 500 fund is one investment, the multiple assets within it ensure you're able to reap the benefits of many different companies and industries. One of the pillars of investing is diversification; while the potential upside of Bitcoin may be enticing, you never want all your money in a single asset. Using dollar-cost averaging and making consistent investments in the S&P 500 is one of the best things you can do to accomplish your long-term goals.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Bitcoin vs. the S&P 500: Which Is the Better First Investment? - Motley Fool