In Bitfinex Cryptocurrency Heist, 2 Charged Range Solicitation Agreement

A Russian-American tech entrepreneur and his wife, an aspiring rapper, have reached an agreement over a scheme to launder billions of dollars in cryptocurrency stolen from one of the world’s largest virtual currency exchanges, according to court records.

The married couple, Ilya Lichtenstein and Heather Morgan, are scheduled to appear for an arraignment and trial before Judge Colleen Kollar-Kotelly in Federal District Court in Washington, DC, on August 3, according to an entry added to the court docket in the case on Friday.

The case document did not contain details of the plea agreement, only that a copy of it had to be delivered to Judge Kollar-Kotelly together with other paperwork by 27 July.

Lawyers for Mr. Lichtenstein and Ms. Morgan did not immediately respond to requests for comment, nor did the Justice Department.

Mr Lichtenstein, 35, and Mr Morgan, 33, were charged in February 2022 with conspiring to launder 119,754 Bitcoin worth $71 million when hackers stole them from Hong Kong-based exchange Bitfinex in a 2016 heist that rocked the cryptocurrency world. The pair were not charged with taking part in the theft.

The exchange breach was one of several that led to large amounts of digital currency being stolen. The thefts, some of which drastically affected cryptocurrency values, underscored the security vulnerabilities of Bitcoin and other digital currencies.

Because such currencies move through decentralized computer networks that are not under the control of any single government or company, most trading takes place on largely unregulated exchanges that provide consumers with little information about their operations. The lack of regulation has led to a number of problems in the virtual currency world.

Bitcoin’s value soared in the years between the Bitfinex heist and the arrest of Mr Lichtenstein and Ms Morgan. In announcing the charges against the couple, officials said they had seized $3.6 billion of the currency from them in what was then the Justice Department’s largest-ever financial seizure. (The total value of the stolen Bitcoin had risen to $4.5 billion by then, officials said.)

According to court documents, the hacker who breached Bitfinex’s systems initiated 2,000 transactions to send the stolen currency to a digital wallet under Mr. Lichtenstein’s control. Over five years, prosecutors said, some 25,000 digital tokens were transferred from his wallet in a complex series of transactions meant to hide their origins.

The couple’s money laundering efforts, prosecutors said, included opening accounts under false names; moving stolen funds in small amounts in thousands of transactions to avoid detection; use computers to automate their transactions; spread funds across virtual currency exchanges; and using US business accounts to hide their illegal activity.

Mr. Lichtenstein and Ms. Morgan used some of the stolen Bitcoin to buy gold, non-fungible tokens and prepaid debit cards, prosecutors said. A $500 card purchased from Walmart was used to pay Uber and fees and buy a PlayStation, according to court documents.

When the couple was arrested, they were living in a two-bedroom condominium on an upper floor of a 42-story luxury building at the intersection of Wall and Water Streets in Lower Manhattan, records showed.

Mr. Lichtenstein, whose nickname is “Dutch,” holds both American and Russian citizenship and has described himself as a technology entrepreneur, according to court documents.

Ms Morgan has described herself on social media as “a serial entrepreneur” and an “irreverent comic rapper” who calls herself “Razzlekhan” and “the crocodile of Wall Street”.

She also wrote magazine articles, including one for Forbes on how to “protect your business” as “cybercriminals and fraudsters take advantage of the disruption caused by the pandemic.”

Susan C. Beachy contributed research.

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