Tech entrepreneur Ilya Lichtensteind, a Russian-American citizen, has admitted to committing the original 2016 Bitfinex hack, CNBC .
Earlier, Lichtensteind and his wife Heather Morgan had to attempting to launder $4.5 billion worth of stolen from Bitfinex.
Until Lichtenstein’s admission on Thursday, it was not publicly known who had hacked Bitcoins from the cryptocurrency exchange Bitfinex in 2016.
The couple was not charged with the hack itself.
The cyber crime duo’s attempts to launder ill-gotten gains traced back to 2016 hack.
The couple’s criminal escapade took on a surreal twist as , adopting the pseudonym “Razzlekhan,” ventured into the world of rap music and tech entrepreneurship while escaping the law enforcement.
Her music videos and rap lyrics, peppered with expletives, painted a picture of a “bad-ass money maker” and a “crocodile of Wall Street.”
Simultaneously, Forbes articles portrayed her as a thriving tech magnate, an “economist, serial entrepreneur, software investor, and rapper.”
Heather Morgan and Ilya Lichtenstein, who is a skilled computer programmer, were orchestrating a sophisticated operation to launder their stolen fortune obtained from the infamous crypto exchange Bitfinex.
The Couple Used Shell Companies to Launder Stolen Funds
The couple meticulously divided the stolen Bitcoins into small amounts, routing them through thousands of different crypto wallets, all under false identities, court documents revealed.
These funds were further intertwined with other criminal cryptocurrency proceeds on the darknet marketplace Alphabay, used to acquire gold coins, and channeled through shell companies in a bid to legitimize their tainted gains.
However, their elaborate scheme began to unravel when investigators linked the couple to the proceeds of the Bitfinex hack through a trail that led to Walmart gift cards, purchased using the stolen funds.
Jonathan Levin, founder of cryptocurrency investigation firm Chainalysis, which played a role in the investigation, noted that the complicated path of buying gift cards and shifting funds between various exchanges and cryptocurrencies didn’t provide the veil of anonymity the couple had hoped for.
A pivotal moment came when law enforcement stormed the couple’s Manhattan residence, unearthing a treasure trove of .
The police found mobile phones in hollowed out books, and dozens of disposable handsets, numerous USB drives, and $40,000 in cash.
Decrypting a meticulously crafted spreadsheet unveiled the intricate web of money laundering strategies concocted by the duo. This breakthrough paved the way for the recovery of nearly the entire stolen amount.
The Couple Was Contemplating a Getaway to Russia
Communication records uncovered by prosecutors revealed that Morgan and Lichtenstein were contemplating a getaway to Russia, Lichtenstein’s country of birth, in a desperate attempt to dodge arrest.
Had their plan succeeded, the couple could have probably never been caught.
The 2016 hack that triggered this $4.5 billion money laundering saga had dealt a severe blow to Bitfinex customers, who collectively suffered a 36% loss of their holdings on the crypto exchange.
By 2019, the exchange had managed to reimburse the affected customers, giving hope for a financial resurgence once the recovered Bitcoins were returned to the rightful owners.
As legal proceedings unfold, Ilya Lichtenstein faces the prospect of a maximum 20-year prison sentence, while Heather Morgan stares at the possibility of up to 10 years behind bars.
“Since their arrests in February 2022, the government has seized another approximately $475 million tied to the hack,” the DOJ said in a press statement Thursday