‘Crocodile of Wall St.’, Hubby Busted Laundering $4.5 Billion in Bitcoin
As you may have heard, considering it is headline news just about everywhere and the accused have become the focus of countless new social media memes, but Ilya Lichtenstein and his wife, Heather Morgan, were arrested in New York City last week by federal agents and charged with conspiracy to commit money laundering and conspiracy to defraud the United States.
What makes this case special? According to the US department of justice, the self-described ‘crocodile of Wall Street and her hacker hubby conspired to launder the proceeds of 119,754 bitcoin ($4.5B USD value today) that had been stolen during a hack of the Bitfinex crypto exchange in 2016. That’s right, I said $4.5 billion! I am not sure if that is a new record in terms of the amount stolen digitally, but it has to be close.
During the 2016 Bitfinex breach the hacker or hackers apparently initiated more than 2,000 unauthorized transactions through Bitfinex’s systems. These transactions then sent 119,754 stolen Bitcoins to a digital wallet controlled by Lichtenstein. Since then, he and Morgan had been busy expertly washing the proceeds before getting caught. Oh, and laying low, as you can see from this awful rap(?) video posted by Morgan, aka Razzlekhan, which was shared on Twitter by Kevin Collier of NBC News.
Not only is that painful to listen to and watch, it is a direct dis’ on law enforcement, plus a show of hubris unseen since the Oedipus event. Morgan claims the song is an anthem, “dedicated to all weirdos, entrepreneurs, hackers, misfits, and all the unique people who pursue what they want. This song represents who I am: a bad ass CEO and female rapper, who’s ready to take on Wall Street, Silicon Valley, and any other place that oppresses individual uniqueness and self expression.”
She may come across as an entitled dope and the unfortunate poster child for everything that is wrong with crypto and decentralization, but that would be a rather foolish assumption. Morgan is obviously very intelligent. Beyond her hacking and crypto expertise, she also served (prior to her arrest) as a contributing writer for Forbes and Inc Magazine, publishing marketing advice articles like the following:
3 Steps to Become an Expert in Anything
Hiring Creatives? Look for These Traits
Why Women Often Beat Men At Negotiation
Morgan also knew her way around a digital money laundering machine. According to the DOJ report, the pair’s complicated laundering schemes included the following cleaning tactics:
- The pair used fictitious identities to set up online accounts; utilizing computer programs to automate transactions, a laundering technique that allows for many transactions to take place in a short period of time
- They deposited the stolen funds into accounts at a variety of virtual currency exchanges and Darknet markets and then withdrew the funds, which obfuscates the trail of the transaction history by breaking up the fund flow
- The pair converted Bitcoin to other forms of virtual currency, including anonymity-enhanced virtual currency (AEC), in a practice known as “chain hopping”
- They also used US-based business accounts to legitimize their banking activity
At base level this crime reveals what could become a disturbing trend of criminals like Morgan walking around with huge, consumer-facing digital footprints before getting caught for their crimes. With FinCrimes, arrests often take months or years, which gives the crook plenty of time to gloat and expose society to their undeserved wealth and arrogance. How is that type of public taunting okay?
If the speed of time-to-arrest improves this trend might disappear. In the meantime I think the tech media could avoid contributing to the comedic atmosphere building around cases like this and just focus on the news. I realize how hard that must be, having seen the video and having read some of her content myself. It doesn’t stop with YouTube videos and professional writing content, as Morgan let herself go on Tik Tok, Instagram and more.
The department of justice is not laughing however, nor is Bitfinex, or anyone who lost Bitcoin as a result of this crime. Lichtenstein and Morgan are likely not laughing, either. Most importantly, the Biden administration, the IRS and the department of justice now have even more compelling proof of the risks and vulnerabilities presented by a decentralized cryptocurrency market. $4.5 billion attracts a lot of attention. The media is all over the story today, but are they really focused on the big issue I just mentioned or too distracted by the players involved?
The bigger story is that cryptocurrency has spawned a golden age of money laundering, one that could crumble under a wave of coming government centralization worldwide.
I’ll leave you with this — is he serious, or is this satire? I honestly can’t tell.
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