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Justice Department retrieves $3.6 billion of stolen bitcoin: who are Ilya Lichtenstein and Heather Morgan?

Close to 120,000 bitcoins were stolen in a 2016 hack of the Bitfinex cryptocurrency exchange and was moved to the couple's accounts in a series of complex trades.

Close to 120,000 bitcoins were stolen in a 2016 hack of the Bitfinex cryptocurrency exchange and was moved to the couple's accounts in a series of complex trades.
Carlo AllegriREUTERS

The Justice Department announced on Tuesday that it had successfully recovered bitcoin with a current value of $3.6 billion stolen in a 2016 hack of the Bitfinex cryptocurrency exchange.

The multi-billion dollar theft saw 119,754 bitcoins stolen and moved through a complex web of digital transactions which the fraudsters hoped would cover their tracks. After an extensive operation the stolen bitcoin was traced to cryptocurrency wallets controlled by Ilya Lichtenstein, 34, and Heather Morgan, 31.

The married couple were arrested in Manhattan on Tuesday morning and were scheduled to appear in court later that day, charged with defrauding the US government and conspiring to commit money laundering.

Who are Ilya Lichtenstein and Heather Morgan?

The couple were arrested in connection with the largest financial seizure in the Justice Department’s history. They both have a background in the blockchain industry as tech entrepreneurs, but have not been charged with actually perpetrating the hack itself.

Illya Lichenstein has duel US and Russian citizenship and describes himself as a ‘tech entrepreneur.’ According to Bloomberg, he moved to the United States at the age of six to flee religious prosecution and was raised in Chicago.

Heather Morgan’s LinkedIn page describes her as a “a serial entrepreneur” and “irreverent comedic rapper,” claiming that she has a BA in Economics from UC Davis, and lists her skills as "Inside Sales" and "Email Marketing."

Multiple reports have found an extensive paper trail of social media accounts detailing her ambitions as a rapper, writer and influencer, many of which under the pseudonym ‘Razzlekhan’. She has authored many articles for Forbes, including one entitled "Protect Your Business from Cybercriminals."

Her website reads: "Just like her fearless entrepreneurial spirit and hacker mindset, Razz shamelessly explores new frontiers of art."

The 2016 breach of the Bitfinex exchange had huge ramifications for the global cryptocurrency markets, which were still in their infancy, and resulted in a 20% drop in the price of bitcoin. The person who successfully hacked the Bitfinex system went on to send the stolen bitcoin to Lichtenstein’s digital wallet over the course of 2,000 separate transactions.

Around 25,000 bitcoin, with a current value of around $1.1 billion, was then moved out of Lichtenstein’s wallet in a complex series of trades that the Justice Department claim was designed to hide the true source of the money.

“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa O. Monaco said in a Justice Department Statement.

“In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”