Couple Agrees to Forfeit 120,000 Bitcoin in Plea Deal

An American couple accused of laundering billions of dollars worth of Bitcoin stolen from the 2016 hacking of virtual currency exchange Bitfinex has entered into a plea agreement, according to court records reported by Reuters. 

Heather Morgan, who used the hip-hop alias “Razzlekhan” to push her music online, and her husband Ilya Lichtenstein were arrested earlier this year and are set to appear for a plea hearing on August 3 before Senior Judge Colleen Kollar-Kotelly in Washington.

Laundered Bitcoin Exceeds $4.5 Billion

Ilya Lichtenstein and Heather Morgan, both residents of New York, are facing charges for allegedly conspiring to launder the proceeds of 119,754 Bitcoin (BTC) that were stolen from Bitfinex in 2016. 

After the hacker breached the platform’s systems and initiated over 2,000 unauthorized transactions, the stolen Bitcoin was transferred to a digital wallet controlled by Lichtenstein. 

Over five years, approximately 25,000 of those stolen Bitcoin were moved out of Lichtenstein’s wallet via a complex money-laundering process, which ultimately resulted in some of the stolen funds being deposited into financial accounts controlled by the couple.

More than 94,000 Bitcoin, the remainder of the stolen funds, were left in the wallet used to receive and store the illegal proceeds from the hack. 

However, after executing court-authorized search warrants for online accounts controlled by Lichtenstein and Morgan, special agents accessed files in an online account controlled by Lichtenstein. 

These files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, enabling law enforcement to lawfully seize and recover over 94,000 Bitcoin, valued at over $3.6 billion at the time of seizure.

According to the criminal complaint, Lichtenstein and Morgan used various sophisticated laundering techniques, including setting up online accounts using fictitious identities, automating transactions using computer programs, depositing the stolen funds into accounts at virtual currency exchanges and darknet markets, converting Bitcoin to other forms of virtual currency, and using U.S.-based business accounts to legitimize their banking activity.

While Bitcoin was worth $71 million at the time of the hack, it had appreciated to over $4.5 billion at the time of their arrest earlier this year. Prosecutors are now seeking to have the pair forfeit assets worth around $3 billion, including cash from bank accounts and tokens from crypto wallets.

Additionally, prosecutors are seeking to have the couple forfeit gold coins that were “excavated and recovered by law enforcement” from an undisclosed location in California. 

At present, Bitcoin remains the largest cryptocurrency in the market, based on trading volume and capitalization. It is currently trading at $29,860, which is relatively stable compared to the previous 24 hours, with a slight increase of 0.5%.

Featured image from Unsplash, chart from TradingView.com