Bitfinex Launderer Pleads Guilty to 2016 Hack

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  • One of the Bitfinex hack launderers arrested last year has pleaded guilty to both the hack and money laundering
  • Ilya Lichtenstein faces significant prison sentences after pleading guilty to the hack as well as laundering the proceeds
  • The theft gained worldwide attention thanks to Heather Morgan’s rap persona ‘Razzlekhan’ 

One of the launderers of the 2016 Bitfinex hack, arrested last year, has also pleaded guilty to hacking the exchange. Heather Morgan and Ilya Lichtenstein were arrested last year in New York after police traced a $500 Walmart gift card to the stolen haul, but were initially only charged with intent to launder the $71 worth of bitcoin stolen, now worth over $4 billion. However, in a dramatic turn of events, not only did the pair plead guilty to the laundering yesterday but Lichtenstein also pleaded guilty to the hack itself. This means that U.S. authorities have this year identified the individuals behind two of the most famous crypto hacks of all time – the 2016 Bitfinex hack and the 2011-2014 MtGox hacks.

‘Razzlekhan’ Helped Case Get Worldwide Attention

Bitfinex suffered a massive hack that led to the theft of $71 million worth of bitcoin in 2016, and last year federal investigators made a significant breakthrough in the case by arresting Lichtenstein and Morgan on suspicion of being recipients of the stolen funds and attempting to launder the majority of the stolen amount.

The story garnered attention not only due to the substantial amount involved in the hack but also because of the personalities of the individuals involved, particularly Morgan. Known for her rapper persona ‘Razzlekhan’, aka the “Crocodile of Wall Street,” Morgan added an intriguing element to the widely publicized case, with many mocking her atrocious rapping as well as her claims to have made her way as a businesswoman.

The key to cracking the case came when investigators traced a $500 Walmart gift card, which had been used by the suspects. This gift card was linked to an email address registered in Russia, and further investigation connected it to an IP address associated with a cloud service provider in New York, eventually leading to Lichtenstein and Morgan.

Couple Planned to Flee to Russia

When they were arrested, Police managed to successfully decrypt a meticulously detailed spreadsheet outlining the couple’s complex money laundering techniques, which enabled them to recover almost the entire stolen amount.

According to court documents, prosecutors found communication records suggesting that Morgan and Lichtenstein had intentions of fleeing the United States for Lichtenstein’s home country, Russia. If their plans had succeeded, they could have likely lived a billionaire lifestyle, beyond the reach of U.S. law enforcement.

Instead, Morgan faces up to 10 years in prison for money laundering while Lichtenstein is in line for a possible maximum of 20 years after pleading guilty to money laundering and an additional count of conspiracy to defraud the United States.