Heather Morgan, known as Razzlekhan, and her husband Ilya Lichtenstein have pleaded guilty to attempting to launder $4.5bn (£3.5bn) of Bitcoin stolen in a 2016 hack. The couple were arrested last year in New York after police traced their illicit wealth back to the crypto heist.
While evading detection, Morgan masqueraded as a rapper and tech entrepreneur, publishing expletive-filled music videos under the name Razzlekhan and claiming to be a successful businesswoman in Forbes articles. Her husband, a computer programmer, was the mastermind behind the hack of the crypto firm Bitfinex.
As part of a plea deal, Lichtenstein admitted to the hack. Both pleaded guilty to money laundering, with Morgan also pleading guilty to conspiracy to defraud the United States. They now face prison sentences: Lichtenstein up to 20 years, Morgan up to 10.
The stolen 119,000 Bitcoins were worth about $4.5bn at the time of arrest, making it the largest single financial seizure in US Department of Justice history. The couple used sophisticated methods to cash out millions, including splitting the Bitcoin into tiny amounts, using fake identities, and mixing funds on the darknet marketplace Alphabay. A key mistake was using Walmart gift cards bought with the stolen funds, which led investigators to trace the proceeds.
Police raided their Manhattan apartment, finding hollowed-out books for concealing mobile phones, dozens of burner handsets, USB sticks, and cash. A decrypted spreadsheet detailing their laundering methods helped recover nearly the full amount. Prosecutors also discovered plans to flee to Russia.
The recovered Bitcoins will be returned to Bitfinex, which had reimbursed customers after the hack. The case highlights the use of blockchain analysis tools in cracking cryptocurrency crimes.
