Ilya “Dutch” Lichtenstein, 34, and Heather Rhiannon Morgan, 31, have been arrested. They are a married couple living in New York City, New York, United States.
In August 2016, a hacker breached Bitfinex’s systems and initiated more than 2,000 unauthorized transactions. Lichtenstein and Morgan allegedly conspired to launder the proceeds of 119,754 bitcoin that were stolen from the platform of the virtual currency exchange.
Founded in 2012, Bitfinex is owned and operated by iFinex Inc registered in the British Virgin Islands. The cryptocurrency exchange is available in Chinese, English, Russian, Spanish and Turkish.
The unauthorized transactions allegedly sent the stolen bitcoin to a digital wallet under Lichtenstein’s control. From 2017 to 2021, approximately 25,000 of those stolen bitcoin were transferred out of his wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts he and his wife controlled.
Lichtenstein and Morgan are accused to using numerous sophisticated laundering techniques, utilizing computer programs to automate transactions and depositing the stolen funds into accounts at a variety of virtual currency exchanges and darknet markets and then withdrawing the funds. The couple allegedly converted bitcoin to other forms of virtual currency in a practice known as chain hopping and used business accounts based in the U.S. to legitimize their banking activity.
Hours after their arrest on February 8, 2022 in Manhattan, New York City, Lichtenstein and Morgan made their initial appearances in federal court in Manhattan. They were each charged with conspiracy to commit money laundering and conspiracy to defraud the U.S.
“Ilya Lichtenstein and his wife Heather Morgan attempted to subvert legitimate commerce for their own nefarious purposes, operating with perceived anonymity,” Homeland Security Investigations acting executive associate director Steve Francis stated. “Today’s action demonstrates HSI’s commitment and ability to work with a collation of the willing to unravel these technical fraud schemes and identify the perpetrators, regardless of where they operate.”
Both Lichtenstein and Morgan were restricted from some financial transactions, including restrictions on any cryptocurrency transactions, and their passports were seized. He posted $5 million bond and she put up $3 million bond.
However, a judge in Washington, D.C., USA ordered Lichtenstein and Morgan jailed pending further review. If convicted, the two face a maximum of 25 years in prison.