Heather Rhiannon Morgan, also known as “Razzlekhan,” has pleaded guilty to a money laundering conspiracy related to the 2016 Bitfinex hack. This hack resulted in the theft of over 119,756 Bitcoin (BTC) from Bitfinex customers. Shortly after, her husband Ilya “Dutch” Lichtenstein admitted to being the mastermind behind the hack.
In a federal court in Washington, D.C., Lichtenstein confessed to both stealing and laundering the stolen funds, finally putting an end to the mystery surrounding one of the largest Bitcoin thefts in history. At the time of the hack, the stolen BTC was worth around $71 million, but today it is valued at $3.4 billion.
According to court documents cited by the Department of Justice, Lichtenstein used advanced hacking tools and techniques to gain access to Bitfinex’s network. He then enlisted the help of his wife, Morgan, to launder the funds and cover his tracks using sophisticated methods such as fictitious identities, darknet markets, chain hopping, and cryptocurrency mixing services. It’s worth noting that some popular crypto mixers, like Blender and Tornado Cash, have already been sanctioned by the U.S. Treasury Department.
During his plea hearing, Lichtenstein revealed that he had converted some of the stolen funds into gold coins, which were later buried by Morgan. Law enforcement officials now know the location of these buried assets. He also converted some of his crypto into cash through intermediaries during his trips to Ukraine and Russia. He physically collected the cash at addresses in both countries and then deposited the money into U.S. accounts for later retrieval in New York City.
Lichtenstein faces a maximum sentence of 20 years in prison, while Morgan faces a maximum sentence of 5 years for their involvement in the crimes. The couple was arrested in February 2022, and the government has seized most of their stolen Bitcoin, totaling 95,000 BTC. This seizure is considered the largest financial seizure in history, with the recovered assets valued at $3.6 billion at the time.
Bitfinex, the exchange affected by the hack, has acknowledged its collaboration with the Department of Justice in recovering the stolen Bitcoin and compensating its customers. The company expressed satisfaction with the outcome, stating that after seven years, their efforts have finally paid off.