The Bitcoin version of ‘Bonnie and Clyde’ is now being accused and arrested in Manhattan of conspiring to launder almost 120,000 bitcoin worth $4.5 billion in the 2016 Bitfinex hack.
Russian-American, Ilya Lichtenstein is also known as “Dutch,” and his wife Heather Morgan a US-born citizen were both arrested in Manhattan.
Deputy Attorney General Lisa O. Monaco said that “Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” she added “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 what form it takes.”
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Lichtenstein’s wife Morgan called herself the “Crocodile of Wall Street,” also has a Tiktok account in which she uploaded a video rapping under the name Razzlekhan, calling herself a risk-loving moneymaker who was sly as a gator. She was an active TikToker too. In one of her videos, Morgan free-style rapped about investing in the meme stocks often discussed on the “Wall Street Bets” subreddit.
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Lichtenstein also frequently posts about Web3 and cryptocurrency and his LinkedIn seems to show that he’s an advisor to a blockchain startup with similar projects.
The Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division said “Today, federal law enforcement demonstrates once again that we can follow the money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” she also added that “The arrests today show that we will take a firm stand against those who allegedly try to use virtual currencies for criminal purposes.”
The court documents show that the couple in their 30s allegedly conspired to launder the proceeds of 119,754 bitcoin that were stolen from Bitfinex’s platform after a hacker breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions. The alleged conspired bitcoin was then sent to a digital wallet under Lichtenstein’s control.
According to the DOJ Lichtenstein and his wife, Morgan were both involved in several types of virtual-currency transactions including NFT purchases. When it comes to the couple’s OpenSea accounts, DOJ said that it now appears that it has been deleted.
Authorities insist that the two used multiple sophisticated methods. Investigations show that they used automated computer programs, and deposited the funds with several crypto exchanges to make them hard to track to carry out their multiple transactions, and to make their activities look legit and real they also used US-based accounts.
And just recently a 34 pages court filing was released that shows the alleged to cover their role in laundering bitcoin by creating a new identity.
It appears that the couple was preparing for their new life in Russia as Morgan was said to be learning the language. The prosecutor also added that they spent one month in Ukraine in 2019.
The couple’s New York apartment was also searched on January 5th, authorities were able to discover cash worth $40,000, over 50 electronic devices, two hollowed-out books, and a bag labeled “burner phone,” they said.
“Several of these files include variations of the word ‘dirty’ in their names, such as ‘dirty_wallet.dat,'” the filing said.
They also discovered that the two were also engaged in various darknet vendor accounts that are offering passports or ID cards for sale.
With these, both Lichtenstein and Morgan are now facing charges of conspiracy to commit money laundering and to defraud the US with a combined sentence of 25 years.
Sources: Markets Insider, Gadgets 360, Justice, New York Times