Self-proclaimed ‘Crocodile of Wall Street’ and her husband are arrested for ‘laundering $4.5B in Bitcoin stolen in 2016
Ilya Lichtenstein, 34, and his wife, rapper Heather Morgan, 31, were arrested Tuesday – they’re are charged with laundering the ill-gotten Bitcoin
Justice Department announced the largest money seizure in its history after Bitcoin worth $3.6 billion was seized from accounts controlled by the couple
The crypto was stolen in the 2016 hack of Bitfinex exchange
Morgan is a former Forbes and contributor and rapper who once declared herself the ‘Crocodile of Wall Street’
A New York 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.
Lichtenstein and his wife, Heather Morgan are accused of helping to “wash” 119,754 Bitcoin pilfered from Bitfinex and allegedly transferred into a digital wallet controlled by Lichtenstein.
The IRS allege the defendants spent only a small fraction of the stolen money, some of it on gold and some on non-fungible tokens, or NFTs, a unique digital representation that is sold or traded as a work of art or collectible
Federal law enforcement officials said they recovered roughly $3.6 billon in cryptocurrency linked to the hack of Bitfinex, a virtual currency exchange whose systems were breached nearly six years ago.
Lichtenstein who has dual US and Russia is co-founder of an online marketing firm. The couple live on Wall Street in lower Manhattan.
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.’
WARNING: EXPLICIT LYRICS https://www.youtube.com/embed/_DIuPPmY9mw?rel=0&showinfo=1
Morgan declared herself the ‘Crocodile of Wall Street’ in one of her rap songs. ‘I’m many things, a rapper, an economist, a journalist, a writer, a CEO, and a dirty, dirty, dirty dirty h*,’ she raps in her 2019 single, Versace Bedouin.
‘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.
In the case that filed in a federal court in Washington DC, Lichtenstein and Morgan have not been charged directly with perpetrating the hack, but rather with receiving and laundering the stolen funds.
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.
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, Graves explained.
Lichtenstein and Morgan are facing charges of conspiring to commit money laundering, as well as to defraud the United States.
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.
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.’
An affidavit filed by an IRS agent against the couple alleges that they spent only a small fraction of the stolen money, some of it on gold and some on non-fungible tokens, or NFTs, a unique digital representation that is sold or traded as a work of art or collectible.
U.S. officials said that because the funds were seized pursuant to a court order, a judge would ultimately decide how the recovered money would be distributed, but also that the government would seek to return funds to the rightful owners.
“We have been cooperating extensively with the DOJ since its investigation began and will continue to do so,” Bitfinex said in a written statement. The company pledged to “follow appropriate legal processes to establish our rights to a return of the stolen bitcoin.”
Cases like these demonstrate that the Justice Department ‘can follow money across the blockchain, just as we have always followed it within the traditional financial system,’ said Kenneth Polite, assistant attorney general of the department’s Criminal Division.
Justice Department officials say that though the proliferation of cryptocurrency and virtual currency exchanges represent innovation, the trend has also been accompanied by money laundering, ransomware and other crimes.
‘Today´s arrests, and the Department´s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,’ Deputy Attorney General Lisa Monaco said in a statement.
‘In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter the form it takes.’