Feb 11
Stranger Than Fiction: $4.5 Billion in Bitcoin and the Millennial Bonnie and Clyde
The Department of Justice today is taking a victory lap on its largest-ever financial seizure of $3.6 Billion in Bitcoin the proceeds of the 2016 Bitfinex Crypto Exchange hack, the assets at the time were valued at $71 million. Arrested were the eccentric Ilya “Dutch” Lichtenstein, 34, and his wife, the rapping “crocodile of Wall Street” Heather Rhiannon Morgan, 31, are standing accused of helping to launder $4.5 Billion — 119,754 Bitcoin pilfered from Bitfinex and allegedly transferred into a digital wallet controlled by Lichtenstein, a dual citizen of both the U.S. and Russia. Court documents describe an incredibly “complex” investigation carried out by special agents with the IRS, FBI, and the Department of Homeland Security. The reality however was largely quarterbacked by private digital cryptocurrency intelligence companies and the good fortune of a 2017 Federal data seizure from Alphabay — when troves of Darknet users became subsequently doxed after authorities gained access to the sites internal transaction logs.
What remains unanswered, however, is whether Morgan and Lichtenstein are actually behind the infamous 2016 hack. They stand accused of laundering the proceeds but the DOJ in its infinite wisdom and parading bravado has yet to unmask them as the hackers. One or both of these indivudals is possibly a cybercriminal mastermind and a mediocre money launderer or there is more to the story. The justice department has its work cut out. While the government has alleged a sophisticated laundering process, what is being described according to crypto experts is being painted as amateur hour. The couple seems to have done a sloppy job in covering their tracks in cleaning the ill-gotten gains. The fiasco is somewhere between stranger than fiction and a likely Netflix special. The unlikely Bonnie and Clyde with a penchant for “taxidermy, weird art”, and making cringey YouTube rap montages.
Many questions are still going unanswered as the DOJ has yet to fully illustrate the role of the Lichtensteins in one of the biggest heists in modern history and the Justice Departments' largest financial seizure. Both have been deemed flight risks and are prohibited from making any further cryptocurrency transactions.
At the couple’s appearance in federal court in Manhattan on Tuesday afternoon, U.S. Magistrate Judge Debra Freeman set bond at $5 million for Lichtenstein and $3 million for Morgan and demanded that their parents post their homes as security for their return to court.
The Justice Department has yet to outline steps to return the proceeds back to its rightful owners. Bitfinex has issued a statement saying it is working with the Justice Department to “establish our rights to a return of stolen Bitcoin.
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