NEW YORK — Authorities arrested a New York couple Tuesday accused of trying to launder billions of dollars’ worth of bitcoin after a hacker stole the funds from one of the world’s largest virtual currency exchanges.
Ilya “Dutch” Lichtenstein, 34, and his wife, 31-year-old Heather Morgan, are accused of conspiring to launder nearly 120,000 bitcoin stolen from Bitfinex in 2016. Authorities said the funds were taken by a hacker who initiated more than 2,000 unauthorized transactions and sent the bitcoin, then worth about $71 million, to a digital wallet that Lichtenstein controlled. Officials did not charge either Lichtenstein or Morgan with being behind the hack.
In the years since the incident, authorities said the value of the stolen bitcoin rose to about $4.5 billion. As part of their investigation, investigators said they seized more than $3.6 billion worth of stolen cryptocurrency, marking the largest financial seizure in the Justice Department’s history.
Officials with Bitfinex said Tuesday that they “have been cooperating extensively with the DOJ since its investigation began and will continue to do so.” They added that they “will work with the DOJ and follow appropriate legal process to establish our rights to a return of the stolen bitcoin.”
In court records, an IRS agent said Lichtenstein and Morgan laundered tens of thousands of bitcoin using a variety of techniques, including computer programs that automated transactions, online accounts set up using fictitious identities and depositing the funds into accounts at other virtual currency exchanges and darknet markets like AlphaBay. Authorities shut down AlphaBay, which had been one of the largest platforms for vendors selling illegal narcotics, stolen financial information, hacking tools and more online, in 2017, according to investigators and The Washington Post.
“In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions,” Deputy Attorney General Lisa Monaco said Tuesday in a statement. She added that the arrests of Lichtenstein and Morgan “show that cryptocurrency is not a safe haven for criminals.”
In court records, authorities said Lichtenstein identified himself as a tech entrepreneur who claimed that the funds under scrutiny came from legitimate business transactions and early investments in cryptocurrency. Morgan was a part-time rapper and ran an email marketing company called SalesFolk, according to the Post.
Authorities charged the couple with conspiracy to commit money laundering and conspiracy to defraud the United States. At a court hearing Tuesday, a judge ordered that Lichtenstein be held on a $5 million bond and that Morgan be held on a $3 million bond, The Associated Press reported.
Prosecutors had asked a judge to deny bail to the couple, pointing to evidence to show they posed a flight risk, such as a folder found during a search of their home that included information on how to get fake IDs. However, defense attorney Anirudh Bansal argued that his clients knew late last year that they were under investigation and that their decision not to flee already disproved prosecutors’ allegations, according to the AP.
Lichtenstein and Morgan face maximum sentences of 20 years in prison if they’re convicted of the most serious crimes levied against them.
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