The ‘crypto couple’ pleads guilty in $4.5 billion bitcoin heist. Here’s how it happened.

The 'crypto couple' pleads guilty in $4.5 billion bitcoin heist. Here's how it happened.

The Crypto Couple’s $4.5 Billion Bitcoin-Laundering Scheme: An Eccentric Tale of Deception and Arrest

The husband-wife duo, Ilya Lichtenstein and Heather Morgan, known for their eccentricities such as walking a leashed Bengal cat in Manhattan and Morgan’s rap performances under the name “Razzlekhan,” are set to appear in federal court on August 3 for a plea hearing. The couple is expected to plead guilty to charges surrounding their alleged orchestration of a massive $4.5 billion bitcoin-laundering scheme. This case garnered significant attention as federal prosecutors deemed it the “largest financial seizure ever.”

The story begins in August 2016 when the cryptocurrency exchange Bitfinex fell victim to a hack. It is worth noting that Lichtenstein and Morgan were not accused of directly carrying out the hack. However, the hack resulted in 119,754 bitcoins being transferred to an external wallet under Lichtenstein’s control. At the time, this amount equated to $71 million, and it caught the attention of the IRS, which initiated an investigation to trace the movement of thousands of subsequent transactions. Eventually, these transactions led investigators to Lichtenstein and Morgan’s personal accounts.

The Department of Justice alleged that Lichtenstein and Morgan employed sophisticated laundering techniques as part of their plot. They created fake identities to establish online accounts, deposited stolen funds into virtual currency exchanges and darknet markets, and converted the bitcoin into various other virtual currencies in an attempt to cover their tracks. These actions formed the basis for charges of conspiracy to commit money laundering and conspiracy to defraud the United States against the couple, carrying a maximum penalty of 25 years in prison.

Authorities stumbled upon a trove of incriminating evidence while investigating the couple. Lichtenstein had meticulously documented the details of the scheme in cloud storage, inadvertently granting authorities access to a list of 2,000 virtual currency addresses and their associated private keys – all linked to the hack. Prosecutors also discovered a spreadsheet containing cryptocurrency exchange account login information, with detailed notes indicating which accounts had been frozen. This evidence firmly tied the couple to the illegal activities.

In a startling revelation, authorities also found evidence suggesting that Lichtenstein and Morgan had planned to flee to Russia using new identities. During the execution of a search warrant at their residence, investigators discovered a folder labeled “personas” in Lichtenstein’s cloud storage, containing information on how to use the dark web to obtain fraudulent identities. Additionally, they found hollowed-out books, numerous electronic devices, a bag filled with “burner phones,” $40,000 in cash, and various foreign currencies.

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Following their arrest in 2022, Morgan has been placed on house arrest with a $3 million bond. Court records revealed that she has secured a new job as a “growth marketing and business development specialist” at an undisclosed tech company. Lichtenstein, whom prosecutors identified as a flight risk due to his Russian citizenship, has remained in custody.

An attorney representing both Lichtenstein and Morgan did not offer any comment ahead of the upcoming plea hearing. The hearing is expected to shed more light on the couple’s actions, motives, and the potential consequences they may face. This case has captivated the media and the public due to its sheer audacity and the staggering sums of money involved.

The outcome of this hearing will likely mark an important chapter in the saga of the crypto couple as they face accountability for their alleged crimes. The stunning combination of eccentricity, deception, and enormous sums of money make this a case that will undoubtedly continue to intrigue and fascinate observers.

• Bitcoin
• Bitfinex
• Bitfinex hack