In the summer of 2016, shockwaves rippled across the cryptocurrency world, when 119,754 bitcoin, worth about $71 million at the time, disappeared from the digital coffers of the Hong Kong-based exchange Bitfinex through thousands of unauthorized transactions. Over the next half-decade, that crypto cache exploded in value, reaching billions - yet the mastermind behind one of the largest heists in crypto history remained a mystery.
In a statement, Lichtenstein said that tech entrepreneur Ilya Lichtenstein, 27, admitted to hacking Bitfinex seven years ago, in federal court. He and his wife, Heather Morgan, a marketing specialist who moonlights as a rapper, were arrested last month on charges of money laundering. When the Department of Justice announced the arrests in February 2022, Lichtenstein and Morgan enthralled the internet, not just because of the case's spooky twists and complexities, but also because of Morgan's extensive and eccentric social media presence.
Lichtenstein grew up in a Midwest suburb and had a high school friend who described him as 'introverted but really tech-savvy'. However, Morgan had two distinct personality traits, one as an ambitious business executive and writer, and another as the self-proclaimed surrealist rapper with'more pizazz' than Genghis Khan.
On August 2, 2016, Lichtenstein used a variety of advanced hacking techniques and tools to purloin 119,754 bitcoins, or more than half of Bitfinex's inventory at the time, court documents show. The court heard Lichtenstein transferred the cryptocurrencies to a cryptocurrency wallet under his control through more than 2,000 transactions and then covered his tracks by deleting the access credentials in Bitfinex's network.
What happened next, the financial equivalent of stealing a pumpkin and having it suddenly turn into a magical horse carriage. The value of bitcoin at the time of the hack was around $600, but the price soared over the years, reaching a peak of more than $68,000 in 2021. As the funds grew, the couple tried to launder it by funneling the funds into dark-net marketplaces, converting the bitcoin into other forms of cryptocurrency, opening accounts under false names and moving the stolen funds into thousands of small-sum transactions to avoid detection, prosecutors said.
Prosecutors said Lichtenstein had used the assets to buy gold coins that Morgan helped bury in California. The pair also traveled to Ukraine and Kazakhstan to meet with middlemen to convert the bitcoin into cash, which was then shipped to addresses in Russia and Ukraine and then pick up to be deposited into American accounts, prosecutors said.
However, the alleged plans came to crashing down on Jan. 5, 2022, when federal agents searched the couple's home in New York City. The authorities found a collection of materials that raised alarms, such as $40,000 in cash and a substantial amount of foreign currency, a set of hollowed-out books and a list of vendors selling fake passports, according to court documents.