Part-Time Rapper And Husband Charged With Conspiring To Launder Billions In Stolen Bitcoin

Earlier this month, federal agents seized over $3.6 billion of stolen Bitcoin and arrested Ilya Lichtenstein and Heather Morgan for conspiring to launder the cryptocurrency stolen in 2016 from Bitfinex, a Hong Kong-based cryptocurrency exchange.  It is the largest financial seizure in the U.S. Department of Justice’s history.  

According to the New York Times, Mr. Lichtenstein is “a little-known Russian émigré and tech investor” and his wife, Ms. Morgan, “is an American businesswoman and would-be social media influencer with an alter ego as a satirical rapper named Razzlekhan.”

Authorities state that the Bitcoin in the couple’s possession represented most of the Bitcoin stolen in the Bitfinex hack.  In the hack, 119,754 Bitcoin--- worth $72 million then, but $4.5 billion now—was siphoned from users’ accounts into a single crypto wallet.  Within hours of the hack, Bitcoin’s value plunged about 20%.   As the New York Times explains, “unlike traditional financial transactions, Bitcoin trades are publicly visible[,]” meaning that “moving the coins risked revealing who was behind the heist.”   As a result, most of the money sat in the wallet untouched for six years while Bitcoin’s value skyrocketed.  In early 2017, small amounts began to exit the wallet through, among other things, dark web transactions that rendered the Bitcoin untraceable.  Allegedly, the money from the wallet eventually entered more traditional financial accounts held by the couple, who spent the stolen Bitcoin on gold, NFTs, and a Walmart gift card.  Hundreds of millions of dollars’ worth of the Bitcoin was also converted into real money, but 80% of the funds initially deposited into that single crypto wallet remained there until January 31, 2022.

Those responsible for the Bitfinex hack itself have not yet been identified.