On 8 February 2022, a New York-based blockchain entrepreneur pair was charged with laundering the profits of a record-breaking bitcoin heist. Prosecutors claim they portrayed themselves as "serial entrepreneurs" focusing on Bitcoin technology and the B2B space, but the only thing they appeared to be doing was laundering stolen money.
The US Has Charged a Blockchain Entrepreneur Couple in a Massive Crypto Money Laundering Investigation
Ilya "Dutch" Lichtenstein, the 34-year-old inventor of a blockchain start-up located in New York, and his wife, Heather Morgan, a 31-year-old blockchain entrepreneur, artist, and rap musician with a volatile social media presence, are the two accused. On the surface, Ilya Lichtenstein and Heather Morgan appeared to be a young hipster couple striving to make it in the computer world. However, federal authorities claim they were secret criminals sitting atop a massive reserve of stolen bitcoin BTCUSD, 4.91 percent, whose value was skyrocketing. Authorities said they were arrested Tuesday morning at their Manhattan residence on allegations of conspiracy to commit money laundering and fool the United States government.
Prosecutors claimed Lichtenstein is a dual U.S. and Russian citizen. He reported getting engaged to Morgan in 2019 on his Facebook page, following years of dating "the woman of my dreams."
Deputy Attorney General Lisa Monaco of the DOJ said on Tuesday, 8 January 2022, that two persons face money laundering and fraud charges. In 2016, hackers stole around 120,000 bitcoin from the Bitfinex currency exchange, which was valued at approximately $71 million. The cryptocurrency's meteoric rise in value is currently valued at roughly $4.5 billion.
Prosecutors said the pair had labored for the last five years to launder the ever-increasing mound of money, which caused major challenges for them. According to court documents, the two appeared to have laundered just around 20% of it. Last Monday, investigators said they recovered around 90,000 bitcoin worth approximately $3.6 billion from the couple's virtual wallets.
The allegations against the couple include:
- Conspiracy to launder 119,754 from the Bitfinex breach through a digital wallet linked to Lichtenstein,
- Moving 25,000 stolen bitcoins from Lichtenstein's digital wallet into his and Morgan's bank accounts via a sophisticated money-laundering scheme.
"As the amount of the money rose, this likely became a considerably more intricate scam than they thought they were entering into when it began," said Zweiback, Fiset, and Coleman attorney Rachel Fiset, who specializes in complex financial fraud cases. "It was going to come up to them eventually since the pot just kept growing." You can't just sit on a few billion bucks for five years and expect it to go undetected."
They have not been charged with carrying out the hack. A court eventually ordered their release on bail — $5 million for Lichtenstein and $3 million for Morgan — but prosecutors appealed, claiming that the couple posed a breakout risk. The pair have secured bail separately on bonds totaling $8 million (£5.98 million), with tight restrictions pending trial. If sentenced, they risk up to five years in prison for fraud and up to twenty years in prison for money laundering.
