U.S. Justice Department announced two arrests in the Bitfinex crypto hack!

tamir
Wed, 09 Feb 2022 08:07:56 +0000
Money Laundering, Pishing, ticker, Heather Morgan, Ilya Liechtenstein, Mark Cuban, MixRank, Razz, Razzlekhan

The U.S. Department of Justice announced the arrest of the New York residents Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, for an alleged conspiracy to launder cryptocurrency that was stolen during the 2016 hack of crypto exchange Bitfinex. The 119,754 stolen bitcoins have a present value of approximately $4.5 billion. Thus far, law enforcement has seized over $3.6 billion in cryptocurrency linked t that hack. The two will be released from jail on $5M and $3M bonds, respectively.

The Crocodile of Wall Street

Ilya Lichtenstein (pictured left with his wife Heather Morgan) is a Russian-U.S. national. He co-founded a tech company called MixRank, which, according to Crunchbase, got off the ground with help from Y Combinator and some early investors including billionaire Mark Cuban. He has since been an advisor for various startups and become an angel investor “interested in blockchain technology, automation, and big data.”

On her website Razzlekhan (https://razzlekhan.com), Liechtenstein’s wife Heather Morgan a/k/a Razzlekhan a/k/a Razz has referred to herself as the infamous Crocodile of Wall Street. She presented herself as a sort of a rapping software CEO. Morgan has also worked as a Forbes contributor between 2018 and 2021.

The Bitfinex Case

Lichtenstein and Morgan 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. Those unauthorized transactions sent the stolen bitcoin to a digital wallet under Lichtenstein’s control. Over the last five years, approximately 25,000 of that stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan.

The remainder of the stolen funds, comprising more than 94,000 bitcoin, remained in the wallet used to receive and store the illegal proceeds from the hack. Special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex.

Fighting cybercrime

The relevant law enforcement agencies are celebrating the action as a success in the fight against cybercrime in the crypto scene.

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 O. Monaco

According to the announcement, federal law enforcement demonstrates once again that they can follow the money through the blockchain. They will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within the financial system.