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Couple gaols: The U.S. justice department dropped a bombshell on the crypto community yesterday when it announced the arrest of a New York City couple for allegedly conspiring to launder 119,754 stolen bitcoin—valued at $4.5 billion and the department's largest-ever financial seizure—hacked from the cryptocurrency exchange Bitfinex in 2016. The couple is accused of trying to cover their tracks by laundering the stolen funds through "a labyrinth of cryptocurrency transactions." The pair are charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in jail, and conspiracy to defraud the U.S., which carries a maximum sentence of five years in prison. Read the full story on Forbes.
Resistance is futile: The arrests "show that cryptocurrency is not a safe haven for criminals," Lisa O. Monaco, the deputy attorney general, said in a statement. "In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions." Last week, it was widely reported that $3.6 billion worth of bitcoin from the Bitfinex hack was on the move.
Bitcoin's Bonnie and Clyde: Ilya 'Dutch' Lichtenstein, 34, and his wife, Heather Rhiannon Morgan, 31, live on Wall Street in lower Manhattan. Lichtenstein, an alumnus of the prestigious Silicon Valley accelerator program Y Combinator, is a citizen of both the U.S. and Russia and the co-founder of an online marketing company. Morgan, a rapper going by the handle Razzlekhan and former Forbes contributor, describes herself as "an expert in persuasion, social engineering, and game theory" and in one of her songs, declared herself the "Crocodile of Wall Street."
Crypto cringe: Morgan, who described herself on her website as Genghis Khan "but with more pizzazz," is a "Very Online Person" and the crypto community has dredged up a lot of her Instagram and TikTok videos, most of which have now been made private or removed. According to her YouTube channel, "Razzlekhan is a surrealist artist & shameless rapper. Her genre is horror-comedy, with a splash of weird allure." In 2020, Morgan wrote a Forbes post headlined: Experts Share Tips To Protect Your Business From Cybercriminals, which quoted Matt Parrella of BitGo, Bitfinex's custodian at the time of the hack.
Crypto's trial of the century: While the complaint warrant filed by U.S. authorities today accuse Lichtenstein and Morgan of being significantly involved in what happened with the Bitfinex hack, they did not accuse Lichtenstein or Morgan of being the actual hackers. Rather, the feds said: "In or around August 2016, a hacker breached Victim [virtual currency exchange’s] security systems and infiltrated its infrastructure." Federal officials allege Lichtenstein and Morgan kept 2,000 crypto wallet addresses and their corresponding seed phrases in a spreadsheet stored on a cloud storage service. The feds accessed the spreadsheet with a warrant.
What next: Last night, a federal judge has halted the release of Lichtenstein and Morgan, it was reported by Coindesk. Per Coindesk: As a condition of their bond, the defendants are allowed to spend up to $10,000 a month on living expenses but they are forbidden to drain their bank accounts or make any cryptocurrency transactions. The couple's cell phones and computers will be confiscated and they will be given a flip phone and one internet-connected device, monitored by pretrial services, so they can access their bank accounts and email their lawyers.
Now read this: Crypto’s aspiring Washington kingmaker
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