United States v. LICHTENSTEIN
1:23-cr-00239
| D.D.C. | Mar 10, 2025|
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Docket
Case 1:23-cr-00239-CKK Document 278 Filed 03/10/25 Page 1 of 12
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
V.
Criminal No. 23-239 (CKK)
ILYA LICHTENSTEIN, et al.
Defendants,
and
JOHN DOE, et al.,
Petitioners/Third-Party Claimants.
OMNIBUS MEMORANDUM OPINION AND ORDER
(March 10, 2025)
Pending before this Court are multiple claims by persons and entities who allege interests
in property that has been forfeited to the Government in connection with this criminal case. More
specially, the property at issue — claimed by these Petitioners/Claimants — is digital currency that
was hacked by Defendant Lichtenstein from Bitfinex, in 2016, and was then laundered by
Defendants Lichtenstein and Morgan. Considered in this Opinion are six motions for leave to file
pseudonymously and/or to file under seal, filed by six Petitioners designated as: (1) “John Doe”
[ECF Nos. 206, 240] (2 motions); (2) “XYZ Inc.” [ECF No. 231]; (3) “John Doe [1] (referenced
as “Tom Doe” on the docket) and Company Doe” [ECF No. 267]; (4) “AH-1” [ECF No. 226];
and (5) “A.B.” [ECF No. 256]. These six Petitioners are collectively referred to herein as the
“Motion- to-Seal Petitioners.” The Government has filed under seal its [210] response to “John
Doe’s” Motion to Seal and its [209] response to “R.F.’s” Motion to Seal. While this
Memorandum Opinion and Order discusses the arguments in various sealed pleadings, it does
not disclose any
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identifying information, and accordingly, it is not being sealed.
Because the arguments presented in the six Motions are duplicative and the arguments in
the two Responses are similarly duplicative, the Court has determined it unnecessary for the
Government to respond to the remaining motions before it makes its ruling, which will apply to
the Petitioners who have requested anonymity through pseudonyms and/or sealing. For purposes
of this Memorandum Opinion and Order, the Court cites to “John Doe’s” [206] Motion for Leave
to File Verified Petition Pseudonymously and Partially Under Seal, and the Government’s [210]
Response thereto, which are representative of all arguments and all oppositions. The Court’s
references to Petitioner “John Doe” extend to all Motion-to-Seal Petitioners herein. Petitioner
“John Doe” indicates that he is “an individual with a third-party claim to property forfeited by the
Defendants in the above-captioned case.” Petitioner’s Mot., ECF No. 206, at 1. Petitioner
proposes to file his Petition and attached exhibits under seal, along with a public version that would
be filed pseudonymously and with limited redactions of proffered confidential information that
gives rise to Petitioner’s privacy and security concerns.
The Parties’ Positions
Petitioner “John Doe” moves for “leave to publicly file his petition pseudonymously with
limited redactions—redacting only his account numbers and the specific amount of assets at issue
in his Petition—and to file under seal an unredacted version of his petition along with Petitioner’s
declaration.” Petitioner’s Mot., ECF No. 206, at 1. Petitioner argues that proceeding
pseudonymously and utilizing redactions (partial sealing) would protect his privacy and security
concerns. Id. at 1-2. More specifically, he asserts generally that “courts have recognized the
unique safety risks presented by publicly identifying individuals and associating them with large
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cryptocurrency holdings or transactions, including risks to them and their families of identity theft,
electronic intrusion, and physical harm.” Jd. at 2. Petitioner contends that there is “no
countervailing need for [his] identity or specific asset holdings to be placed in the public record at
this time.” Petitioner’s Mot., ECF No. 206, at 3.
The Government indicates that it “does not oppose reasonable redactions, including much
of what has been proposed by [John Doe], but is duty-bound to oppose all but the most necessary
redactions in a case of substantial public interest.” Govt. Resp., ECF No. 210, at 1. The
Government contends, and this Court agrees, that under the controlling case law, “sealing is only
appropriate to protect, at most, [John Doe’s] full name and the types of personally identifiable
information (PII) protected by Fed. R. Crim. P. 49.1, such as full financial account numbers and
home addresses” while information “including ‘specific amounts of assets’—should remain
unsealed and open to the public to promote confidence in the legitimacy and fairness of this judicial
proceeding.” Govt. Resp., ECF No. 210, at 2 (relying on Washington Post v. Robinson, 935 F.2d
282 (D.C. Cir. 1991) and United States v. Hubbard, 650 F.2d 293 (D.C. Cir. 1980)). The
Government notes further that these details that are undisclosed to the public “should be disclosed
to the Government, the Court, and to any other petitioners in the third-party ancillary proceeding,
whose claims may be in competition with [John Doe’s] and who may have knowledge as to the
validity of [John Doe’s] claims vis-a-vis other petitioners.” Govt. Resp., ECF No. 210, at 2 n.2.!
The Government does not suggest how this should be accomplished, but the Court notes that most
of these Motion-to-Seal Petitioners are represented by counsel (with one party acting pro se). The
| The Court notes that it has access to sealed non-redacted versions of documents, many of which
indicate that they were provided to the Government.
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Government explains that because the “ancillary proceeding will determine the disposition of
forfeitable assets valued at more than $10 billion [,]” it is “imperative that the proceedings in this
case be carried out as transparently as possible.” Jd. at 1. The Court agrees with the Government
and finds that full disclosure to other petitioners (of details protected from public disclosure) shall
be effectuated by the Motion-to-Seal Petitioners prior to participation in any ancillary proceeding.
Applying the Legal Standard for Sealing
“(T]here is a ‘strong presumption in favor of public access to judicial proceedings,’
including judicial records.” In re Leopold, 964 F.3d 1121, 1127 (D.C. Cir. 2020) (quoting
Hubbard, 650 F.2d at 317). “Access to records serves the important functions of ensuring the
integrity of judicial proceedings in particular and of the law enforcement process more generally.”
United States v. Hubbard, 650 F.2d 293, 315 (D.C. Cir. 1980). Allowing inspection “serves to
produce an informed and enlightened public opinion” and “to promote the search for truth, and to
assure confidence in judicial remedies.” Jd. at 315 n.79 (internal citation, alteration, and quotation
marks omitted).
This presumption in favor of public access may, in some case, “be outweighed by
competing interests,” which are evaluated pursuant to a six-factor test set forth in Hubbard, as
follows:
(1) the need for public access to the documents at issue; (2) the extent of previous public
access to the documents; (3) the fact that someone has objected to disclosure, and the
identity of that person; (4) the strength of any property and privacy interests asserted; (5)
the possibility of prejudice to those opposing disclosure; and (6) the purposes for which
the documents were introduced during the judicial proceedings.
In re Leopold, 964 F.3d at 1127, 1131 (D.C. Cir. 2020) (quoting Metlife, Inc. v. Fin. Stability
Oversight Council, 865 F.3d 661, 665 (D.C. Cir. 2017). “The ‘Hubbard test has consistently
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served as [the] lodestar’ for evaluating motion to seal or unseal judicial records ‘because it ensures
that [the court] fully account[s] for the various public and private interests at stake.’” In re
Leopold, 964 F.3d at 1127 (quoting Metlife, 865 F.3d at 666). Petitioner “John Doe” relies instead
on five factors set forth in In re Sealed Case, 931 F.3d 92, 97 (D.C. Cir. 2019) to determine whether
litigants may proceed anonymously. These are: (1) whether the asserted justification is to avoid
annoyance or criticism or to preserve privacy in a matter of sensitive and highly personal nature;
(2) whether identification poses a risk of retaliatory physical or mental harm to the requesting party
or others; (3) the age of the persons whose interests are to be protected; (4) whether the action is
against a government or private party; and (5) the risk of unfairness to an opposing party from
allowing an action to proceed anonymously. Jn re Sealed Case, 931 F.3d at 97. Petitioner asserts
generally that “the first, second, fourth, and fifth factors are relevant and all weigh in favor of
allowing Petitioner to proceed pseudonymously,” Petitioner’s Mot., ECF No. 206, at 4, and his
argument focusing on these factors will be incorporated into the Court’s analysis of the Hubbard
factors below. As explained below, the Court finds that, on balance, these Hubbard factors, as
well as the factors relied upon by Petitioner, favor limited sealing of the Motion-to-Seal
Petitioners’ identities and PII, but do not favor sealing of the specific asset amounts.
1. Need for Public Access
As noted previously herein, there is a presumption in favor of public access, which ensures
“the integrity of judicial proceedings and the law enforcement process,” and is “fundamental to a
democratic state.” Upshaw v. United States, 754 F. Supp. 2d 24, 28 (D.D.C. 2010) (Kollar-Kotelly,
J.) (quotation omitted). This is particularly relevant where the case, as here, involves “issues of
major public importance.” Jn re Application of National Broadcasting Co., Inc., 653 F.2d 609,
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614 (D.C. Cir. 1981). This presumption of public access extends to briefs and evidence submitted
in support of a claim because those materials constitute the “information with which the parties
hope to influence the court, and upon which the court must base its decision.” Metlife, Inc., 865
F.3d at 667. The scope of the requested sealing is also relevant. See, e.g., Upshaw v. United
States, 754 F. Supp. 2d at 28 (where the plaintiff “made no attempt to address the need for public
access to each and every document on the public docket” and instead filed a motion targeted
towards sealing “the entirety of the case,” his failure was “fatal”). Where redactions sought “are
not targeted to deprive the public of access only to particularly sensitive or confidential
information,” a plaintiff does “not overcome the presumption that the public has a legitimate
interest in knowing all of the facts involved in [the] case.” Patel v. Garland, Civil Action No. 23-
3215 (JEB), 2023 WL 7536574, at *2 (D.D.C. Nov. 13, 2023) (internal quotation marks and
citations omitted).
In the instant case, Petitioner does not address specifically the weight of any public interest
in this unsealed case, which involves the potential disposition of assets worth billions of dollars.
Nor does Petitioner convincingly argue that the “specific amounts of assets” constitutes
confidential information that warrants redaction, particularly where the amount of Petitioner’s
claim is integral and relevant to the integrity of the ancillary proceeding. In contrast, the Court
finds that Petitioner’s other proffered redactions of PII involve “particularly sensitive or
confidential information” that outweigh the presumption of public interest in that information.
Accordingly, the Court finds that the factor of “need for public access” weighs in favor of sealing
of “John Doe’s” name and PII, where such PII does not include the specific asset amounts at issue.
Case 1:23-cr-00239-CKK Document 278 Filed 03/10/25 Page 7 of 12
2. Extent of Previous Public Access
The Government agrees that “John Doe” has not been publicly identified in this case as a
Petitioner or a former accountholder claiming victim status for purposes of restitution, and
accordingly, this factor supports sealing of “John Doe’s” name and PII.
3. Objections to Disclosure (preservation of privacy)
The Government acknowledges that “Hubbard provides broader protection when a third
party’s privacy or property rights are at issue and that third party objects.” United States v.
Munchel, 567 F. Supp. 3d 9, 18 (D.D.C. 2021) (internal quotation marks and citation omitted). In
this case, “John Doe” has asserted a privacy interest, and accordingly, this objection on privacy
grounds weighs in favor of sealing of John Doe’s name and PII.
4. Strength of any Property and Privacy Interests Asserted (possible retaliatory harm)
“The third, fourth, and fifth Hubbard factors are interrelated, and require courts to look at
the strength of the property and privacy interests involved, and to take into account whether anyone
has objected to public disclosure and the possibility of prejudice to that person.” Upshaw, 754 F.
Supp. 2d at 29. The Government asserts that the kinds of privacy interests recognized under this
framework are often “more particular than mere desire to protect one’s name from publicity.”
Govt. Resp., ECF No. 210, at 5. These may include personal information that is protected by
attorney-client privilege, discusses tax returns, includes intimate details about someone’s life, or
constitutes confidential business information. United States v. All Assets Held at Bank Julius Baer
& Co., 520 F. Supp. 3d 71, 83 (D.D.C. 2020) (citations omitted).
Petitioner here asserts that the sealing request is necessary to protect general “privacy and
security concerns” including “identity theft, electronic intrusion, and physical harm.” Petitioner’s
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Mot., ECF No. 206, at 2; at 4 (asserting that he has a “compelling interest in his physical safety
and protection from identity theft of crypto assets”). These types of generalized concems weigh
less heavily under the framework of Hubbard. See, e.g., Bank Julius Baer, 520 F. Supp. 3d at 84
(finding “vague, conclusory assertions of potential threats, without any evidence supporting a
specific fear based on the release of the documents at issue . . . are not sufficient to weigh in favor
of nondisclosure”); United States v. Munchel, 567 F. Supp. 3d at 19 (finding “[d]efendants’ appeal
to generalized safety concerns is not enough to swing the fourth Hubbard factor in their favor,”
where [in that case,] defendants’ involvement in the events of January 6, 2021 was already publicly
known). The Government however has no objection to “masking of [John Doe’s] name as well as
any PII such as full account numbers” even though the Government argues that Petitioner “has
articulated only generalized concerns that they might be targeted for theft or violence, [as opposed
to] any concrete or specific threat.” Govt. Resp., ECF No. 210, at 5; but see Petitioner’s Mot.,
ECF No. 206, at 5 (citing In re Genesis Global Holdco, LLC, 652 B.R. 618, 637 (Bankr. S.D.N.Y.
2023) (highlighting the specific risks inherent with cryptocurrency, even with “publication of
names alone”). The Court notes that this case cited by Petitioner is distinguishable since the
Government has agreed that Petitioners’ names may be masked.
Regarding the sealing of specific amounts of cryptocurrency at issue, Petitioner contends
generally that revealing this information would make him “particularly vulnerable to attacks.”
Petitioner’s Mot., ECF No. 206, at 5 (referencing a case involving the sealing of commercial
information relating to a promotional agreement between a debtor corporation and another
corporation, in the context of a bankruptcy proceeding). The Court finds that Petitioner has not
proffered an adequate explanation as to why permitting him to file pseudonymously and to mask
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his PII, such as account numbers, would not be sufficient to protect against his concerns of theft
and violence, and why additional sealing of the “specific amounts” at issue is necessary.
Possibility of Prejudice to those Opposing Disclosure (and any risk of unfairness to others)
(where the Government holds the forfeited assets)
The possibility of prejudice [to Petitioner] factor is “interrelated” with the strength of his
general privacy interest in not becoming a target for theft or violence, which was discussed above.
Upshaw, 745 F. Supp. 2d at 29. Regarding any unfairness to others, Petitioner argues that sealing
the proffered confidential material does not pose any risk of unfairness because “Defendants have
already relinquished any claim to the property subject to forfeiture” and “the remaining party is
the government,” and Petitioner “has already disclosed the information to the government!.]”
Petitioner Mot., ECF No. 206, at 7. This statement ignores the reality that Petitioner’s claim is
potentially adverse to claims by the other petitioners in this case, some of whom have already
publicly identified themselves and the amount of their contested assets at issue.
Furthermore, while Petitioner has indicated that he has provided unredacted information to
the Government and the Court, as previously noted herein, prior to participating in any third-party
ancillary proceeding, Petitioner will need to provide that information to any other petitioners in
the ancillary proceeding whose claims may be in competition with “John Doe’s” and who may
have knowledge of the validity of “John’s Doe’s” claims in elation to. other petitioners.
Otherwise, there is a risk of unfairness to the other Petitioners.
5. The Purpose for which Documents are Introduced in the Judicial Proceedings
“(There is a strong presumption of public access to documents that a litigant submits with
the intention that the court will rely on them.” Bank Julius Baer, 520 F. Supp. 3d at 85. Here, the
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documents provided by Petitioners are “filed before the district court’s decision [on any ancillary
proceeding claims]” and “are intended to influence it.” Jd. (internal citation and quotations
omitted). “Transparency and access to these documents is central to the integrity of the[ ]
proceedings.” Herron v. Fannie Mae, Civil Action No. 10-943 (RMC), 2016 WL 10677615, at
*4 (D.D.C. June 20, 2016). “Without access” to these materials, it is “impossible to know which
parts of those materials persuaded the court.” Metlife, 865 F.3d at 668.
Furthermore, Petitioner’s request to redact the specific “asset amounts” runs contrary to
the importance of transparency in the proceedings. The Government argues, and this Court agrees
that “[a] central issue in the third-party ancillary proceeding” is whether petitioners have “an
interest in specific forfeited property,” as opposed to a general claim of an unsecured creditor.
Govt. Resp., ECF No. 210, at 7 (emphasis added); see United States v. BCCI Holdings
(Luxenbourg) S.A., 46 F.3d 1185, 1191 (D.C. Cir. 1995) (construing materially identical language
in 18 U.S.C. §1963(1)(6). In this case, a petitioner’s claim will depend on tracing a claim of
ownership to one or more items of specific property itemized in the Second Amended Preliminary
Order of Forfeiture and Corrected Second Amended Attachment A. Sealing the amount of assets
being claimed would “obscure whether the petitioner is claiming only some, or all, of a given
property - - - and by extension would make it impossible for the public to understand whether one
petitioner’s claim runs in conflict with another petitioner’s claim.” Govt. Resp., ECF No. 210, at
8. Because it is unnecessary to protect against a petitioner’s generalized concerns, and because
the asset amounts are integral to the merits and evidence underlying a petitioner’s claim, the Court
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declines to permit sealing of the asset amounts and limits sealing to a Petitioner’s name and PII.
Accordingly, it is this 10th day of March 2025, hereby
ORDERED that the following motions (1) Motion for Leave to File Verified Petition
Pseudonymously and Partially Under Seal by “John Doe,” ECF Nos. 206, and Motion for Leave
to File Motion to Intervene and Supporting Documents Pseudonymously and Partially Under Seal
by “John Doe,” ECF No. 240; (2) Sealed Motion for Leave to Proceed by Pseudonym and File
Motion to Intervene and Objection to Proposed Restitution Order and Verified Ancillary Petition
by “XYZ Inc.,” ECF No. 231; (3) Motion for Leave to File Motion to Intervene and Ancillary
Petition Pseudonymously and Partially Under Seal by “John Doe [II] and Company Doe,” ECF
No. 267; (4) Motion to Seal by “A.B.,” ECF No. 256; and (5) Motion for Leave to File Under Seal
by “AH-1,” ECF No. 226 are GRANTED IN PART AND DENIED IN PART. As indicated
herein, these Petitioners may redact their full name and PII from the publicly filed version of
their documents, but the total asset amounts being claimed shall not be redacted. Following these
guidelines, within ten days, the Petitioners who are represented by counsel shall ensure that a
redacted public version of their motions/petitions is filed on the docket. Any information that has
been redacted shall be immediately available to the Government, as the Court will permit the
Government to access all sealed documents on the docket. Furthermore, prior to participation in
any ancillary proceeding, Petitioners shall disclose their redacted information to “any other
petitioners in the third-party ancillary proceeding, whose claims may be in competition with [John
Doe’s] and who may have knowledge as to the validity of [John Doe’s] claims vis-a-vis other
petitioners,” and it is further
ORDERED that counsel for Petitioner AH-1 shall enter a Notice of Appearance (which may
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reference the pseudonym for their client’s name) so that they are added to the case docket, and it
is further
ORDERED that, in the interest of judicial efficiency, this Court will ensure that a redacted
public version of the documentation filed by Petitioner A.B. (who is acting pro se) is docketed, as
it has done with other pro se Petitioners (whose names have been revealed but whose PII was
redacted).
/s/
COLLEEN KOLLAR-KOTELLY
UNITED STATES DISTRICT JUDGE
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