Following the crypto-money
The Justice Department announced Tuesday that it seized $3.6 billion worth of bitcoin last week, recovering about 94,000 of the roughly 119,754 bitcoin stolen in a 2016 hack of cryptocurrency exchange Bitfinex. The feds also arrested a couple they say tried to launder the pilfered bitcoin, worth about $70 billion when it was stolen but $4.5 billion now. The married couple, Ilya "Dutch" Lichtenstein, 34, and Heather Morgan, 31, were arrested in Manhattan without incident Tuesday morning.
"In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions." said Deputy Attorney General Lisa Monaco. "The message to criminals is clear: Cryptocurrency is not a safe haven. We can and we will follow the money, no matter what form it takes." She said the recovered bitcoin marks the Justice Department's "largest financial seizure ever."
Lichtenstein and Morgan were not charged with stealing the bitcoin, but rather conspiracy to commit money laundering and conspiracy to defraud the U.S. Prosecutors argued in Tuesday's arraignment that the couple is a flight risk, but the magistrate judge set bail at $5 million for Lichtenstein and $3 million for Morgan and ordered them to stay off the internet and wear ankle monitors if they paid the bond.
Lichtenstein, who holds Russian and U.S. citizenship, and Morgan, a part-time rapper, have promoted themselves on social media as tech and cryptocurrency entrepreneurs. Lichtenstein's profile on Medium describes him as a "tech entrepreneur, explorer, and occasional magician," while Morgan's LinkedIn page links to her personal website, where she goes by the stage name Razzlekhan, a rapper with a "fearless entrepreneurial spirit and hacker mindset," The Wall Street Journal reports.
Morgan was also a prolific contributor to Forbes, where her bio says that "when she's not reverse-engineering black markets to think of better ways to combat fraud and cybercrime, she enjoys rapping and designing streetwear fashion." Among her Forbes articles, BuzzFeed News notes, is one titled "Experts Share Tips to Protect Your Business From Cybercriminals."
Law enforcement officials have expressed growing concerns about cryptocurrencies being a boon to ransomware syndicates and other criminals. But Tuesday's actions show that investigators are learning to trace cryptocurrency years after illicit transactions occurred, former Treasury Department official Ari Redboard tells the Journal. "As the obfuscation techniques evolve, so do the tools authorities have to track them," he said. "The blockchain is forever."