The Biggest Cryptocurrency Heist in History
Ilia “Dutch” Lichtenstein and his wife, Heather Morgan, popularly known as the “Bonnie and Clyde of bitcoins,” stole 120,000 bitcoins, currently valued in billions of dollars, in what is now known as the most significant cryptocurrency theft in history.
Details of the Heist
The couple’s complex operation involved buried gold treasure, intermediaries in Ukraine and Russia, and resulted in the largest seizure by the US Department of Justice. Lichtenstein, after being found guilty of money laundering, was sentenced to five years in prison. Morgan also received an 18-month sentence for her role in the Bitfinex crypto exchange looting. Lichtenstein, however, maintains his wife’s innocence.
Morgan’s Online Persona
Morgan’s online presence is split between a businesswoman who runs an email marketing company and a self-proclaimed ‘horror comedy’ rapper known as Razzlekhan or “The Wall Street Crocodile.” This persona, according to her lawyer, was created to cope with a challenging period in her life. The media portrayal has resulted in a damaged reputation and a deluge of hate mail.
Money Laundering Activities
The stolen bitcoins, valued at $71 million in 2016, had soared to around $4.5 billion by the time of the couple’s arrest in 2022. The current value of the stolen cryptocurrencies is estimated at $10.5 billion. The couple engaged in money laundering by converting some of the stolen funds into gold coins that Morgan buried and by conducting thousands of transactions through fake-named accounts. This theft shook Bitfinex, accounting for 36% of all its funds at the time, which required implementing emergency measures to offset the losses.
The Arrest and Recovery of Stolen Cryptocurrencies
The couple was arrested in their New York apartment in February 2022. Authorities seized more than 94,000 bitcoins valued at over $3.6 billion at the time. They managed to recover 96% of the stolen funds.
Money Laundering Methods
Lichtenstein, a successful entrepreneur, had been involved in numerous small hacking and financial fraud operations before the Bitfinex heist. He disclosed his involvement in the heist to Morgan a year after they got married in 2019 and sought her help in concealing the illicit gains. The couple used highly sophisticated methods to launder the money, including procuring debit cards and documents associated with foreign bank accounts registered in intermediaries’ names. They used darknet forums and marketplaces to further their operation.
Cooperation with Authorities
Lichtenstein, described by prosecutors as a leading figure in cryptocurrency money laundering, received a reduced sentence due to his cooperation with the authorities. He assisted in other cases and even testified in a trial while in jail. Morgan also received a reduced sentence as she was the one who convinced Lichtenstein to cooperate with the authorities. Lichtenstein has expressed remorse for his actions and offered to aid authorities in preventing other cybercrimes.
