On Tuesday, the U.S. Department of Justice (DOJ) arrested two individuals that are accused of an “alleged conspiracy to launder” 94,636 bitcoins stolen from Bitfinex in 2016. Both of these suspects are well-known in the tech industry. Ilya Lichtenstein, a Y-Combinator-backed startup, was co-founder of Mixrank and Heather Morgan was a Forbes writer.

The Myriad of Mysterious Bitcoin Transfers From the 2016 Bitfinex Hack

The U.S. government announced the “largest cryptocurrency seizure to date” after the DOJ seized 94,636 bitcoins that were stolen in the August 2016 Bitfinex hack. On August 2, 2016, a hacker managed to breach Bitfinex and steal 120,000 bitcoin (BTC). Bitcoin’s price shuddered 24 hours after the breach losing 22% in USD value during the course of the aftermath. At first, Bitfinex talked about reimbursing customers with a bail-in haircut plan, which means traders would only get a fraction of losses.

Two weeks later after the 120,000 BTC was stolen, Bitfinex gave the crypto community an investigation update. Bitfinex introduced “recovery right tokens” to compensate customers who had lost their funds. The coins were called BFX tokens and by April 3, 2017, at 8 p.m. UST (4 p.m. EST), the crypto exchange revealed it had paid its debt in full. People stopped talking about Bitfinex’s stolen bitcoins. However, the addresses that held the coins were being monitored.

In June 2019, the thieves moved 170 BTC and then 300 BTC in August 2019. On May 21, 2020, 30 coins from the Bitfinex hack started moving, and had been transferred once again to another unknown address. On June 11, 2020, hackers moved stolen Bitfinex coins, as they transferred 416 bitcoin to an unknown address. About a week later, the thieves moved 2,500 bitcoins and in October 2020, the hackers transferred 2,034 BTC to unknown wallets.

5,045 BTC was moved by the hackers on December 1, 2020, and then on April 14, 2021, thousands upon thousands of stolen Bitfinex bitcoins were transferred, and caught by blockchain parsers. But the most unusual move of them all was on February 1, 2022, when 94,643. 29 bitcoin was consolidated into one address with no privacy-preserving tactics used. The moved bitcoins on February 1, represented 79. 03% of the 119,756 BTC stolen on August 2, 2016.

Ilya Lichtenstein and Heather Morgan: The Duo Accused of Laundering Billions in Bitcoin Stolen From Bitfinex

Following the odd transfer, the DOJ announced on February 8, 2022, that it seized approximately 94,636 bitcoins and arrested two individuals. The accused Bitfinex bitcoin money launderers were Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31. The two accused bitcoin money launderers were well-known in the tech community and didn’t hide their existence online. Mixrank was co-founded by Lichtenstein and is the CEO. This platform allows customers to discover each other through a system that connects them with sales reps. Mixrank and Lichtenstein managed to raise $1.5 million from Mark Cuban and other investors.

Lichtenstein had no problem with public appearances and speaking in interviews about his entrepreneurship. Lichtenstein’s wife Heather Rhiannon Morgan was also not shy and was a contributor at Forbes, and wrote articles about things like cybercriminals. Morgan had close to 5,000 Instagram followers and she considered herself a street rapper and was called “Razzlekhan.” While performing and acting as her alter ego Razzlekhan, she also called herself “the Crocodile of Wall Street,” and the musician published a dedicated website.

” Razz is a hacker and entrepreneur who explores new frontiers in art, just like her fearless spirit.” razzlekhan.com states. Links are scattered all over the web about Morgan and Lichtenstein, since they shared a lot of entrepreneurial spirit. Morgan’s Linkedin profile states that she is a “Serial entrepreneur, SaaS Investors and Surrealist.” Lichtenstein studied psychology and worked in marketing. After growing up in Russia, Lichtenstein holds dual citizenship from the U.S. as well as Russia. After Lichtenstein’s career at Mixrank, he allegedly worked for a “stealth security startup.” The duo’s marriage is fairly recent as well, as Morgan and Lichtenstein got married in November 2021.

In addition to working for a “stealth security startup,” Lichtenstein was an angel investor at Demandpath.

Lightenstein was an angel investor at Demandpath.

The U.S. government also did not detail what will happen to the seized bitcoin (BTC), but it’s assumed the coins will be auctioned like prior seizures. Although no one knows how Morgan and Lichtenstein got involved in the Bitfinex hack bitcoins, it is clear that the pair did not hide anything. The couple, who were married in November 2021, broke the news that they would wed in the summer months before the wedding.

“[Heather Morgan is my] best friends and the woman I dreamed of,” Lichtenstein stated at the time.

Currently, the couple remains in prison because court prosecutors say the duo “presents a serious risk of flight.” The court prosecutors’ filing claims Lichtenstein and Morgan may still possess 7,506 ill-gotten bitcoin (BTC). If true, that would leave $333.8 million using current BTC exchange rates at the duo’s disposal.

The investigation also revealed that Lichtenstein and Morgan engaged in extremely complex laundering of a part of the stolen funds kept in wallet 1CGA4s,” according to the filing details. “Specifically, beginning in or around January 2017, a portion of the stolen BTC moved out of wallet 1CGA4s in a series of small, complex transactions across multiple accounts and platforms.” The Washington judge presiding over the case halted the couple’s chance at bail after the prosecutors filed the flight risk concerns.

What do you think about the couple accused of laundering the 94,636 bitcoin seized by the DOJ? Please comment below to let us know your thoughts on this topic.

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