American Couple Accused of Laundering $4.5 Billion in Bitcoin: Here’s How It Happened


A married couple was arrested Tuesday by the US Department of Justice (DOJ) for allegedly trying to launder stolen Bitcoins worth approximately $4.5 billion. The cryptocurrency was first stolen during a massive exchange hack in 2016. At least 120,000 Bitcoins were stolen at the time and are believed to be worth $65 million.

US Department of Justice officials in a press release called it a “record amount of cryptocurrency stolen” and said they had “seized at least $3.6 billion in cryptocurrency tied to that hack which they will now try to return to their victims.” rightful owners.” ”

Meet the ‘brains’ of the operation

US authorities have identified masterminds Ilya Dutch Lichtenstein and Heather Morgan as the masterminds of the operation. Although the DOJ has not publicly linked them to the actual hacking of the cryptocurrency exchange, the investigation is ongoing.

By the way, Morgan has been quite popular on social media. She called herself a rapper “Razzlekhan,” a pseudonym that she said on her website referred to the Mongol conqueror Genghis Khan “but with more pizzazz.” A Reuters note that she also actively wrote about “Tips to protect your business from cybercriminals” and featured an interview with a cryptocurrency exchange owner on “how to prevent fraud”.

According to your LinkedIn profiles, Lichtenstein and Morgan have been listed as SalesFolk employees since 2009 and 2014, respectively. Morgan’s LinkedIn bio suggests he was also a columnist for Inc Magazine and Forbes, while Lichtenstein lists previous roles at MixRank, Endpass and 500 Startups.

Revealing the scam

In 2016, Hong Kong-based cryptocurrency exchange Bitfinex said that at least $65 million worth of crypto assets were stolen. Bitfinex had said that the hackers took a total of 119,756 Bitcoins and the impact of the loss was shared among the site’s users. “We have decided to generalize the losses in all the accounts. Upon logging into the platform, customers will see that they have experienced an overall loss percentage of 36.067 percent,” the company said in a statement at the time.

It is worth noting that the hacked crypto assets were never cashed out. This was possible because all other cryptocurrency exchanges blacklisted the hackers’ addresses. This prevented them from converting the stolen Bitcoin into fiat currency. This is only possible because the cryptocurrency works with Blockchain technology, which makes it easy to track any transaction.

The cryptocurrency was left in the accounts of hackers for the last four and a half years. However, in August 2021, over $760 million worth of Bitcoin was suddenly transferred to new crypto wallet accounts. According to a summary of recent transactions put together by The Record, this ranged from 10057.5798 to 12230.08861 Bitcoins. This huge movement of funds alerted the authorities to trace the hacker’s wallet address.

According to a statement of events, “U.S. authorities tracked the stolen funds on the BTC blockchain” as the proceeds of the hack moved from the initial recipient’s wallet to wallets allegedly controlled by Lichtenstein and Morgan.

Law enforcement officials decrypted a file “saved in the Lichtenstein cloud storage account” that included 2,000 crypto wallet addresses and their private keys. “Blockchain analysis confirmed that almost all of those wallets were directly linked to the hack,” the statement added.

NFT, gold bought

After transferring Bitcoins to their crypto wallet, the duo spent the proceeds on items including gold, NFTs and a $500 Walmart gift card, Reuters reported. The defendant allegedly used a number of techniques to launder the stolen Bitcoin, including splitting transactions into “thousands” of smaller transactions, converting them into other types of crypto, such as Monero, and then using the darknet market.

According to the US DOJ, AlphaBay is one such platform allegedly used by the pair. The statement adds that some of the funds went to an account linked to a company called SalesFolk, which was owned by Morgan.

What does Bitfinex say?

Bitfinex in a statement said it was working with the Justice Department to “establish our rights to the return of stolen bitcoin.”

“If Bitfinex receives a recovery of the stolen bitcoin, within 18 months from the date it receives that recovery, Bitfinex will use an amount equal to 80 percent of the recovered net funds to buy back and burn outstanding tokens,” the company added. .


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