New York man admits Bitfinex hack in bitcoin money launder plea

A New York man on Thursday admitted to being the original hacker of bitcoin in the 2016 cyberattack on Bitfinex, a theft that ended up being worth $4.5 billion.

Ilya “Dutch” Lichtenstein made that bombshell admission while pleading guilty to laundering the stolen bitcoin in Washington, D.C., federal court.

The plea came before his wife, Heather Rhiannon Morgan, who was in the audience, stepped up to enter her own guilty plea hearing in the case.

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

The couple had not been charged in the hack itself.

When they were arrested in February 2022, the Department of Justice said officials had seized more than 94,000 bitcoin of the more than 119,000 hacked bitcoin. The seized bitcoin was worth about $3.6 billion, making it the largest seizure in DOJ history.

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

But its value soared over the years to $4.5 billion, as about “25,000 of those stolen bitcoin 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.

Lichtenstein, who is a Russian emigre, has been held without bond since his arrest after a judge ruled he is a flight risk.

He will remain jailed until his sentencing on a count 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 plea hearing. She has been free on $3 million bond since her arrest.

Lichtenstein smiled at her and blew her a kiss during their moment of eye contact, the first time they had seen each other in more than a year. 

During Lichtenstein’s plea hearing, it was revealed that he had converted some assets to gold coins, and that Morgan had buried gold coins at a location now known to law enforcement officials.

And it also was revealed that Lichtenstein’s past travel to Ukraine and Kazakhstan was done to convert digital assets to cash through Russian and Ukrainian middlemen. That cash was then shipped to addresses in Russia and Ukraine, where Lichtenstein pick it up physically and deposited it into U.S. accounts so he could retrieve it while in New York City.

The Crypto Couple’s separate plea hearings were moved up from their originally scheduled times Thursday due to arraignment later in the afternoon in the same courthouse of Donald Trump. The former president was charged Thursday in that case with crimes related to an effort to overturn his 2020 election loss.

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

This shuffling, which created a voluminous number of transactions, was designed to conceal the path of the stolen funds,” according to that filing by the U.S. Attorney’s Office for the District of Columbia.

Prosecutors wrote that in February 2018, Lichtenstein and Morgan established an account at a U.S. financial institution for their company, Endpass, “and in doing so, represented to [that institution] that the primary payments into the account would be from software-as-a-service customer payments.”

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

On the heels of their arrests last year, Netflix said it had commissioned a series on the couple.

– Eamon Javers reported from Washington, D.C. Dan Mangan reported from Natick, Mass.

This is breaking news. Please check back for updates.