Couple accused of laundering stolen Bitfinex cryptocurrency reaches plea deal

A couple accused of laundering billions worth of stolen cryptocurrency has agreed to a plea deal, according to documents filed in federal court on Friday.

Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, were arrested last year after the Justice Department seized $3.6 billion worth of cryptocurrency from the couple.

A hearing scheduled for Monday was vacated and instead the couple will appear for an arraignment and plea hearing in Washington, D.C. on August 3.

The details of the plea deal were not available at press time.

Lichtenstein and Morgan — who is known more widely by her rapper name “Razzlekhan” – were accused of playing a pivotal role in laundering some of the 119,754 Bitcoin, worth about $71 million at the time, stolen from an exchange called Bitfinex in August 2016. The funds were allegedly sent to cryptocurrency addresses under the suspect's name through more than 2,000 transactions.

The Department of Justice said that roughly 25,000 Bitcoin were moved by the couple through a "complicated money laundering process."

The pair allegedly set up fake online identities to launder the money, depositing the funds into several virtual currency exchanges and darknet markets before withdrawing them — all in an effort to muddy the trail for investigators.

The couple also allegedly used U.S. banks to launder the money before being caught. Chainalysis tracked the movement of the funds taken by the couple and said they initially deposited the cryptocurrency into the now-defunct darknet market AlphaBay, which the couple “essentially used as a mixer by depositing the stolen Bitcoin and withdrawing equivalent amounts.

“Some funds moved to AlphaBay directly from the initial theft wallet, while others were moved there through intermediary wallets,” Chainalysis said.

The blockchain research firm noted that the couple even cashed out some of the stolen funds through a platform that allows you to buy gift cards for Walmart and other businesses.

The Justice Department gained access to the funds after the FBI obtained a search warrant for one of Lichtenstein's cloud storage accounts. The account had cryptocurrency addresses and private keys that were "directly linked to the hack."

Morgan was released on a $3 million bond last year but authorities held Lichtenstein because a judge deemed him a flight risk due to his dual Russian-American citizenship.

Israeli authorities arrested two brothers, Eli and Assaf Gigi, in June 2019 for their alleged involvement in the 2016 hack.

The hack of Bitfinex was considered the largest ever on a cryptocurrency platform at the time. The Hong Kong-based platform managed to continue operating after the incident, reimbursing all of its customers.