The New York couple charged with trying to launder $4.5 billion in Bitcoin (BTC) stolen from a hack on the Bitfinex crypto exchange in 2016 has reached a plea deal with the United States District Court for the District of Columbia.
Crypto Couple Pleads Guilty To Laundering Stolen Bitcoins
The accused, Ilya Lichtenstein, and his wife Heather Rhiannon Morgan have agreed to forfeit proceeds from the almost 12,000 Bitcoin they are accused of laundering. The couple has also been newly charged in the case with a charging document known as “information”, which prosecutors typically use when defendants have agreed to plead guilty.
Both Lichtenstein and Morgan, who were arrested by the Department of Justice (DOJ) in February of last year, have been ordered to appear before a judge on August 3 for separate arraignments and plea hearings on the information. For the crimes they committed, the couple is facing up to 20 years in prison.
According to a Washington D.C. federal court docket entry on Friday, Judge Colleen Kollar-Kotelly of the District Court of Columbia has ordered prosecutors and defense lawyers to provide the plea deal paperwork by July 27.
The DOJ Seized $3.6 Billion Worth Of Bitcoin In The Bust Of The Century
During their arrest, the DOJ seized 94,000 Bitcoins worth $3.6 billion at the time from the couple. Deputy Attorney General Lisa O. Monaco said it is considered the department’s largest financial seizure in history.
All the confiscated Bitcoins were part of the 119,754 Bitcoins stolen from the Hong Kong-based Bitfinex crypto exchange when it was hacked in 2016. The assets were originally worth just $70 million but soared in value in the following years.
According to court documents, both Lichtenstein and Morgan allegedly conspired to launder the Bitcoins using “numerous sophisticated laundering techniques” which included using fake identities, automating transactions, and then depositing the funds across a variety of exchanges and darknet marketplaces by employing a process known as “layering”.
Authorities claim that at the time of the hack itself, over 2,000 unauthorized transactions were performed to send approximately 25,000 of the stolen Bitcoins out of a crypto wallet controlled by Lichtenstein. Some of the funds ended up being deposited into the bank accounts of Lichtenstein and Morgan.
Private Keys To The Wallet Containing The Stolen Bitcoin Were Stored In A Cloud Account
The remaining funds, comprising more than 94,000 BTC, remained in Lichtenstein’s wallet, which federal agents got access to after court-authorized search warrants were executed.
The couple is alleged to have converted the Bitcoin to other cryptocurrencies, specifically tokens that made transactions anonymous, as well as created U.S.-based business accounts for transferring the funds in order to legitimize their activities.
Lichtenstein apparently stored the private keys to his wallets in cloud storage. After federal prosecutors established a search warrant, they got access to an encrypted file saved on the 34-year-old’s cloud account which contained 2,000 crypto wallet addresses and their corresponding keys.
The Couple Are Not Charged For The Bitfinex Hack
It is worth noting that Lichtenstein and Morgan are not charged with participating in the Bitfinex hack. After the couple’s arrest, the DOJ put out a press statement detailing that the two had conspired to launder the funds stolen by a hacker who breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions.
Blockchain analysis confirmed that when Lichtenstein’s encrypted file was opened, they found the exact number of addresses that were directly linked to Bitfinex.
To this day crypto followers are puzzled as to whether Lichtenstein and Morgan were involved with the hack, or what relationship they had with the hacker.
Morgan, who is a rapper that goes by the name “Razzlekhan”, is currently out on a $3 million bond, while her partner Ilya “Dutch” Lichtenstein has been held in jail since February 2022 without bond. A federal judge ruled that the Russian immigrant was a flight risk.
Prosecutors have been in plea negotiations with the couple just weeks after their arrest.
Their story gained a massive following as mainstream news media were running developments of the case full-time. Netflix also got into the mix after they commissioned a docu-series based on the couple months after their arrest.