A married couple has been arrested and charged with laundering billions in Bitcoin stolen during the 2016 Bitfinex hack, as the Justice Department announced its largest financial seizure ever. Ilya ‘Dutch’ Lichtenstein, 34, and his wife, Heather Rhiannon Morgan, 31, who raps under the name Razzlekhan, were arrested on Tuesday in Manhattan on federal charges of conspiracy to commit money laundering and conspiracy to defraud the United States.
Federal law enforcement officials said they recovered roughly $3.6 billion in cryptocurrency linked to the hack of Bitfinex, a virtual currency exchange whose systems were breached nearly six years ago. Lichtenstein and Morgan live on Wall Street in lower Manhattan. He is a citizen of both Russia and the United States and the co-founder of an online marketing firm.
Morgan, a rapper and former Forbes contributor, describes herself as ‘an expert in persuasion, social engineering, and game theory’ and in one of her songs, declared herself the ‘Crocodile of Wall Street.’ ‘When she’s not reverse-engineering black markets to think of better ways to combat fraud and cybercrime, she enjoys rapping and designing streetwear fashion,’ her Forbes bio reads.
The August 2016 Bitfinex hack itself was one of the largest crypto heists ever recorded – so massive that news of the theft knocked 20 percent off Bitcoin’s value at the time. Lichtenstein and Morgan are thus far not charged directly with perpetrating the hack, but rather with receiving and laundering the stolen funds. The case was filed in a federal court in Washington, D.C.
It was unclear who will be representing the couple in the criminal case and whether they had an attorney to speak on their behalf. They were due to appear in federal court in Manhattan at 3 p.m. on Tuesday.
The couple is accused of conspiring to launder 119,754 bitcoin that was stolen after a hacker attacked Bitfinex and initiated more than 2,000 unauthorized transactions. Justice Department officials said the transactions at the time were valued at $71 million in Bitcoin, but with the rise in the currency’s value, it is now valued at over $4.5 billion.
‘As the complaint alleges, the FBI and federal prosecutors were able to trace the movement of Bitcoin from this hack,’ said Matthew Graves, the U.S. Attorney for the District of Columbia. He added that the money moved through a major darknet exchange tied to a host of crimes, as well as cryptocurrency addresses tied to child sexual abuse materials.
Lichtenstein and Morgan are facing charges of conspiring to commit money laundering, as well as to defraud the United States. Prosecutors said on Tuesday the illegal proceeds were spent on a variety of things, from gold and non-fungible tokens to ‘absolutely mundane things such as purchasing a Walmart gift card for $500.’
Bitfinex said in a statement that it was to working with the Department of Justice to ‘establish our rights to a return of the stolen bitcoin.”We have been cooperating extensively with the DOJ since its investigation began and will continue to do so,’ the company said.
Bitfinex said it intends to provide further updates on its efforts to obtain a return of the stolen bitcoin as and when those updates are available. Tuesday’s criminal complaint came more than four months after Monaco announced the department was launching a new National Cryptocurrency Enforcement Team, which is comprised of a mix of anti-money laundering and cybersecurity experts.