Crypto couple pleads guilty to money-laundering conspiracy linked to $4.5 billion Bitfinex hack

Crypto Couple Pleads Guilty to Money-Laundering Conspiracy Linked to $4.5 Billion Bitfinex HackCrypto Couple Pleads Guilty to Money-Laundering Conspiracy Linked to $4.5 Billion Bitfinex Hack

In this post:

  • Ilya Lichtenstein and Heather Morgan pleaded guilty to laundering $4.5 billion in Bitcoin stolen from Bitfinex.
  • The couple used complex schemes to launder the funds, including burying gold coins and international travel.
  • The case marked a significant recovery of $3.6 billion, with Bitfinex praising the DOJ’s efforts.

In a landmark court appearance, Ilya Lichtenstein, a 35-year-old self-proclaimed angel investor, and his wife Heather Morgan, an internet rapper who calls herself “Razzlekhan” or the “Crocodile of Wall Street,” admitted to orchestrating the theft of Bitcoin valued in billions from the cryptocurrency exchange, Bitfinex.

Lichtenstein and Morgan pleaded guilty to a conspiracy tied to money laundering before US District Judge Colleen Kollar-Kotelly. The plea is the culmination of a protracted saga that began with the Bitfinex hack in 2016, where 119,754 Bitcoin were stolen. The value of the stolen Bitcoin, once below $1,000, soared to $44,000 at the time of the couple’s arrest in 2022, escalating the worth of the stolen assets to $4.5 billion.

Lichtenstein, who positioned himself as a tech investor on social media, confessed during the hearing that he was the primary orchestrator of the 2016 hack. He now faces a maximum of 20 years in prison.

Couple strikes deal with prosecution amid money laundering accusations

Morgan, who developed a prominent social media profile by rapping about investment strategies, confessed her knowledge of the hack only came about in 2020, with the initial assumption that her husband’s funds may have originated from drugs or tax evasion. She could face up to five years in prison for conspiring to defraud the US government.

In the hearing, the prosecution revealed the complex processes by which Lichtenstein conducted the hack and how Morgan assisted in obscuring the source of the illicit funds. From burying gold coins converted from stolen Bitcoin to setting up fictitious accounts, the couple undertook elaborate measures to launder the funds and hide the proceeds of their illegal activities.

According to a filing by the U.S. Attorney’s Office for the District of Columbia, the shuffling of funds created numerous transactions which were designed to conceal the path of the stolen money. Prosecutors stated that in February 2018, Lichtenstein and Morgan established an account at a U.S. financial institution for their company, Endpass. They represented to the institution that primary payments into the account would come from software-as-a-service customer payments. However, as charged in the filing, the account was used to launder the proceeds of the hack of Bitfinex.

The prosecution also revealed that Lichtenstein covered up the trail of transactions by making deposits and withdrawals from various virtual currency exchanges and darknet markets. The funds were also used to purchase non-fungible tokens (NFTs), gold, and Walmart gift cards.

This admission comes as part of a cooperation agreement with the government following multiple requested delays by the couple since their arrest in 2022. Under this arrangement, the duo agreed to forfeit almost $73 million combined.

The duo has agreed to cooperate with federal investigators. Lichtenstein, deemed a flight risk, remains in custody until sentencing. Morgan, however, has been free on a $3 million bond since her arrest.

According to a spokesperson from Bitfinex, the company worked closely with the U.S. Department of Justice to track down the couple responsible for the hack, retrieve the bitcoin that was stolen, and ensure that they faced consequences for their actions. Bitfinex said that their effort has finally paid off after seven years of tracking the people behind the hack.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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