A couple accused of laundering funds drained from crypto exchange Bitfinex in the 2016 hack have agreed to enter a plea deal with U.S. authorities, according to a person familiar with the matter.
Heather “Razzlekhan” Morgan and Ilya Lichtenstein, married New York residents who were arrested in February 2022, had faced allegations of money laundering and conspiracy to defraud the U.S. The U.S. Attorney has ordered the couple to forfeit billions of dollars worth of bitcoin, ether, stablecoins and other cryptocurrencies, in addition to cash from their bank accounts, at the time of conviction, according to a court filing.
In February 2022 a judge granted bail to Morgan but not to Lichtenstein, after the defense argued the case against her was weaker than the one against him, that the only evidence against Morgan was she “allegedly received funds that are tied to the act” and that her health problems necessitated a release.
A plea deal would bring to a close one of the most dramatic criminal cases in the history of cryptocurrency, a field that has seen more than its share of scandals. It remains a mystery who hacked Bitfinex, at the time one of the largest such heists recorded, and Morgan's idiosyncratic music videos added a touch of comic relief to the affair. (This year, she got a new tech job while the case was pending.)
It is unclear how much time either defendant could serve behind bars. Last year, the pair faced two conspiracy charges each that posed a maximum sentence of 25 years. They have been ordered to appear for an arraignment and plea hearing on Aug. 3 before U.S. District Judge Colleen Kollar-Kotelly in Washington, according to court records.
“It was the object of the conspiracy for the defendants, MORGAN and Lichtenstein, to unlawfully enrich themselves by laundering the proceeds of the hack and scheme to defraud the victim virtual currency exchange, Bitfinex and to prevent detection of the laundering activity," the new filing said.
Lawyers for neither Morgan nor Lichtenstein were immediately available to respond to CoinDesk's request for comment.
Morgan and her husband were accused of laundering roughly 25,000 BTC and had access to another 94,000 BTC stolen – worth roughly $3.5 billion at the time of publication – stolen during an exploit of Bitfinex in 2016.
Federal officials were able to seize the 94,000 BTC when the couple were arrested in early 2022. Back then, the DOJ alleged the two conspired to launder these proceeds and heavily implied, but did not claim, they were the original hacker(s). Much of the remaining 25,000 BTC were transferred out over the past five years, through various wallets and darknet marketplaces.
The couple and their lawyers previously intended to fight the charges, alleging there were “many deficiencies in the Government’s proof and unsupported, conclusory leaps,” previous filings show. The first signs of a plea deal appeared in March 2022, when prosecutors told a court they were in talks with Morgan’s attorneys about a possible “resolution” to her case that would not include a trial.
Liechtenstein, a dual U.S.-Russian citizen, renewed his Russian passport in 2019, said prosecutors in February 2022. The duo traveled to Ukraine in 2019, where they allegedly created and updated various files in online accounts that contained information about money laundering. The defense said it was just a vacation.
The Department of Justice didn’t immediately respond to CoinDesk's request for comment.
UPDATE (July 10. 2023, 16:45 UTC): Adds details throughout.
UPDATE (July 10. 2023, 16:57 UTC): Adds background about Morgan's bail and her defense's case.
UPDATED (July 21, 18:00 UTC): Corrects attributions in first two paragraphs.
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