Hacker sentenced over bitcoin theft worth billions
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A hacker who helped launder the proceeds of a bitcoin theft from a cryptocurrency exchange was sentenced to five years in prison for his role in the conspiracy.
The Justice Department (DOJ) said in a release that Ilya Lichtenstein, 35, hacked into the network of crypto exchange Bitfinex in 2016 using sophisticated hacking tools to fraudulently authorize over 2,000 transactions that transferred 119,754 bitcoin from the exchange to a crypto wallet he controlled. He then deleted files from the exchange’s access logs that could’ve revealed his actions to law enforcement.
Lichtenstein’s scheme to launder the ill-gotten gains was aided by his wife Heather Morgan, a rapper who goes by the stage name “Razzlekhan” and went viral on social media platforms after the case was revealed. In one of her songs, Morgan rapped about how she is the “crocodile of Wall Street.”
The pair deployed what the DOJ called “numerous sophisticated laundering techniques” to launder the bitcoin; using fictitious identities to set up online accounts; automated transactions; and depositing stolen funds into darknets and crypto exchanges, then withdrawing the funds.
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Ilya Lichtenstein was sentenced to five years in prison over his bitcoin theft and money laundering scheme. (Photo illustration by Chesnot/Getty Images / Getty Images)
They converted bitcoin to other cryptocurrencies – a practice known as “chain hopping” – and deposited the criminal proceeds into crypto mixing services. The duo also utilized U.S.-based accounts to legitimize banking activity and swapped some of the stolen funds for gold coins.
Prosecutors wrote in a filing that Lichtenstein told Morgan about the hack three years later, though he previously obtained her assistance in the scheme “without explaining exactly what he was doing.” They added that the duo successfully laundered about 21% of the proceeds.
The stolen bitcoin was worth roughly $70 million at the time it was stolen, though that rose to over $4.5 billion at the time of their arrest and is worth more than twice that amount at current prices.
Heather “Razzlekhan” Morgan pleaded guilty over her role in Lichtenstein’s stolen crypto laundering scheme. (OLIVIER DOULIERY/AFP via Getty Images / Getty Images)
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Both Lichtenstein and Morgan pleaded guilty to conspiracy to commit money laundering in August 2023. In addition to his five-year prison term, Lichtenstein was ordered by the court to serve three years of supervised release.
Morgan is scheduled to be sentenced on Nov. 18.
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