New York couple pleads guilty to the $4.5B Bitfinex hack

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A technology entrepreneur and his rapper wife have pleaded guilty to the largest digital asset hack in history. The New York couple admitted to the 2016 Bitfinex hack and laundering the $4.5 billion loot, 18 months after their arrest.

The U.S. Department of Justice (DOJ) announced the arrest of technology entrepreneur Ilya Lichtenstein and his wife, Heather Morgan, in February 2022.

Lichtenstein has been held in a Virginia jail since a judge ruled he was a flight risk. Morgan, an online rapper who goes by “Razzlekhan” (she describes it as Genghis Khan, but with more pizzazz), was released on a $3 million bond.

Lichtenstein has now pleaded guilty to the hack in which he allegedly stole 120,000 BTC, the DOJ reveals.

Bitfinex Hacker and Wife Plead Guilty to Money Laundering Conspiracy Involving Billions in Cryptocurrencyhttps://t.co/p0g6Di9j0R

— Criminal Division (@DOJCrimDiv) August 3, 2023

In a plea hearing in a Washington court, Lichtenstein—after blowing a kiss to his wife, whom he hadn’t seen in over a year as she has been under house arrest—admitted to hacking the exchange in 2016, stealing the BTC and laundering a portion of it.

During the plea hearing, he revealed that he had converted some of the stolen BTC to gold coins, some of which his wife had helped him bury. He then shared the location of the gold coins with the court.

He further revealed that he had taken trips to Kazakhstan and Ukraine, where he met with “money mules” who converted the stolen BTC to cash. They would then ship the money to Russia, where he deposited it in U.S. banks.

Morgan also stepped up to plead guilty to money laundering and conspiracy to defraud the U.S. government.

She denied any knowledge of her husband’s crimes up until 2020, claiming she became suspicious when she saw him burning documents in a trash can during one of their trips to Ukraine. Morgan said she later discovered that her husband was the infamous Bitfinex hacker and had since then been helping him launder the stash.

The sentencing date has yet to be set. Lichtenstein faces a maximum of 20 years behind bars for conspiracy to commit money laundering, while his wife faces 10 years imprisonment, five each for money laundering and defrauding the U.S. government.

Not your ordinary couple

In its statement, the DOJ claims that Lichtenstein used “advanced hacking tools and techniques to gain access to Bitfinex’s network.” After stealing the 120,000 BTC, he took steps to cover his tracks.

Since then, he has employed sophisticated laundering techniques with his wife’s assistance, including using false identities to set up online financial accounts and leveraging darknet markets to obfuscate the money trail. He also relied on BTC mixers such as Helix and Bitcoin Fog.

The stolen BTC was only worth $70 million at the time of the heist. As the BTC price soared, the stash peaked at over $4.5 billion, making it the largest heist in the industry.

At the time of their arrest, DOJ claimed to have seized over 94,000 BTC, worth $3.6 billion, making it the largest seizure by the department. It has confiscated another $475 million since the arrest, it revealed in a statement.

“Following the August 2016 hack, Bitfinex engaged in unprecedented efforts to make its customers whole,” the exchange stated in its response. “After seven years, those efforts have come to fruition.”

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of group from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.