New York man admits to Bitfinex hack in money laundering plea

A New York man admitted Thursday that he was the original hacker of bitcoin in the 2016 hack of Bitfinex and pleaded guilty in federal court to conspiracy to launder the stolen cryptocurrency, which ended up being 4.5 worth billions of dollars.

The guilty plea by Ilya “Dutch” Lichtenstein in Washington, DC, came before his wife, Heather Rhiannon Morgan, appeared in the same courthouse for her own plea hearing in the case, which led to the largest financial seizure in Justice Department history.

Until Thursday’s admission in court by Liechtenstein, it was not publicly known who had hacked bitcoin from the cryptocurrency exchange Bitfinex.

Lichtenstein, a Russian émigré, has been held without bond since his February 2022 arrest with his wife after a judge ruled he is a flight risk. He will remain incarcerated until his sentencing on a charge of conspiracy to commit money laundering and has agreed to cooperate with federal investigators.

Morgan, an aspiring rapper known as “Razzlekahn” and “The Crocodile of Wall Street,” was in court for her husband’s arraignment.

Lichtenstein smiled at her and gave her a kiss during their eye contact, the first time they had seen each other in over a year.

Lichtenstein and Morgan were accused in the case of trying to launder more than 119,000 bitcoins stolen in the 2016 hack of cryptocurrency exchange Bitfinex. The pair were not charged in the hack itself.

When the bitcoin was stolen, it was only worth $70 million.

But its value increased over the years when about “25,000 of the stolen bitcoins were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan,” The DOJ said when they were arrested.

At the time of their arrests, the DOJ said officials had seized more than 94,000 bitcoin of the hacked bitcoin, which at the time of the seizure was worth about $3.6 billion.

The crypto pair’s separate plea hearings were moved up from their originally scheduled times on Thursday due to court hearings later in the afternoon at the same Donald Trump courthouse. The former president was charged Thursday in that case with crimes related to an attempt to overturn his 2020 election loss.

A charging document filed last month against the pair says that in early 2107, Lichtenstein “began moving a portion of the bitcoin” stolen in the hack “in a series of small, complex transactions across multiple accounts and platforms.”

This mix-up, which created a voluminous number of transactions, was designed to conceal
the trail of the stolen funds,” according to the filing from the U.S. Attorney’s Office for the District of Columbia.

Prosecutors wrote that in February 2018, Lichtenstein and Morgan set up an account at a U.S. financial institution for their company, Endpass, “and thereby represented to (that institution) that the primary payments into the account would be from software-as-a- service customer payments.”

“In reality, Lichtenstein and Morgan used the account to launder the proceeds
hack of” Bitfinex, the filing fees.

On the heels of their arrests last year, Netflix said it had ordered a series about the pair.

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