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Bitcoin. NFTs. A PPP mortgage. And a rapping tech entrepreneur.
A New York Metropolis couple had been arrested Tuesday morning by federal brokers on expenses of laundering some $4.5 billion stolen in an enormous 2016 cryptocurrency alternate breach.
As is likely to be anticipated in 2022, the most recent federal regulation enforcement takedown options the buzziest of buzz-worthy themes—in addition to some fairly terrible rap lyrics.
Ilya “Dutch” Lichtenstein, 34, and his spouse, Heather Rhiannon Morgan, 31, are accused of serving to to “wash” 119,754 Bitcoin pilfered from Bitfinex and allegedly transferred right into a digital pockets managed by Lichtenstein, a twin citizen of each the U.S. and Russia, prosecutors introduced. Court docket paperwork describe an extremely complicated investigation carried out by particular brokers with the IRS, FBI, and the Division of Homeland Safety.
U.S. District Court docket for the District of Columbia
“Right this moment’s arrests, and the division’s largest monetary seizure ever, present that cryptocurrency isn't a protected haven for criminals,” Deputy Lawyer Common Lisa O. Monaco mentioned in a press release. “In a futile effort to take care of digital anonymity, the defendants laundered stolen funds by means of a labyrinth of cryptocurrency transactions. Due to the meticulous work of regulation enforcement, the division as soon as once more confirmed the way it can and can comply with the cash, it doesn't matter what type it takes.”
Lichtenstein and Morgan are scheduled to make an preliminary look in federal courtroom this afternoon. It's unclear if the 2 have but retained legal professionals to talk on their behalf. Lichtenstein’s father, Illinois-based mortgage dealer Yevgeniy Likhtenshteyn, instructed The Day by day Beast on Tuesday that he was unable to touch upon his son’s arrest.
Morgan, who's additionally a rapper and goes by the stage identify Razzlekhan, acquired engaged to Lichtenstein in 2019.
“I acquired engaged to my greatest buddy and the lady of my desires!” he wrote on Fb, describing “the way it all went down.”
A photographer who was contacted by Morgan to doc the engagement instructed The Day by day Beast that she described herself and Lichtenstein as “bizarre and eccentric,” saying that they each loved “taxidermy and bizarre artwork.”
Morgan, who typically referred to herself within the third individual, mentioned she was “flashy and colourful,” whereas Lichtenstein was “into grey and black and a few leather-based and goth ninja,” in accordance with the photographer, who requested to not be named.
The pair needed photographs of “Dutch and all his wives,” which might be Photoshopped pictures of Lichtenstein with Morgan “as Razzlekhan with a number of personas,” in accordance with the photographer, who mentioned the entire mission “sounded exhausting.”
“I used to be not mendacity after I mentioned I used to be too busy to tackle this mission,” he mentioned. “However listening to those raps she made, they had been so unhealthy, I used to be type of like, ‘I don’t know if I can take care of this.’ As a result of generally, for a sure worth, you may make your schedule work. And I couldn’t actually provide you with a quantity.”
Morgan has been a Forbes contributor, advising burnt-out execs to “strive rapping” in an effort to recharge their batteries. One article Morgan wrote, which was revealed in June 2020, was titled, “Consultants Share Ideas To Defend Your Enterprise From Cybercriminals.”
Relationship again to July 2017, Morgan has contributed no less than 55 articles to the web site. A Forbes spokesperson instructed The Day by day Beast that Morgan was a “contributor up till September 2021,” on the identical time noting she “was by no means a Forbes worker.”
“We're at all times including and modifying our contributor community, and don’t touch upon particular contributors who're not a part of our community,” the spokesperson added.
Morgan contributed to Inc. as properly, publishing articles below headlines akin to “Tips on how to Begin a Dialog With Even the Busiest Leaders,” and “How I Flew to 13 Nations in First Class With out Shopping for Tickets.”
As well as, Morgan is the founding father of an organization referred to as SalesFolk, which describes itself as “the primary firm to specialise in chilly e-mail copywriting.”
Morgan and Lichtenstein allegedly “employed quite a few refined laundering strategies, together with utilizing fictitious identities to arrange on-line accounts; using laptop applications to automate transactions, a laundering approach that permits for a lot of transactions to happen in a brief time period; depositing the stolen funds into accounts at a wide range of digital forex exchanges and darknet markets after which withdrawing the funds, which obfuscates the path of the transaction historical past by breaking apart the fund move,” prosecutors mentioned.
In a felony grievance unsealed Tuesday, Morgan is accused of hiding the precise supply of the digital belongings she was trying to deposit into a brand new institutional account at an unnamed digital forex alternate.
“My boyfriend (now husband) gifted me cryptocurrency over a number of years (2014, 2015,), [sic] which have appreciated,” she allegedly wrote in an e-mail. “I've been conserving them in chilly storage.”
Morgan and Lichtenstein deceived a number of monetary providers companies, misrepresenting their intentions with one by claiming one other crypto account could be used to obtain buyer funds to be processed “by a U.S.-based monetary providers and software-as-a-service firm,” the grievance states. But, the feds say the “bulk of the funds acquired” had been nearly solely made up of 5 wire transfers from one other crypto account managed by the 2, totaling greater than $758,000.
“The one different vital deposit to the account was an roughly $11,000 U.S. Small Enterprise Administration Paycheck Safety Program (PPP) mortgage advance supplied in response to the COVID-19 disaster,” the grievance states.
Prosecutors mentioned the pair spent the proceeds from the theft on gold, NFTs, and “mundane issues akin to buying a Walmart present card for $500.” In a press release, Bitfinex mentioned it's working with the Division of Justice to claw again the stolen Bitcoin.
“Criminals at all times go away tracks, and immediately’s case is a reminder that the FBI has the instruments to comply with the digital path, wherever it could lead,” FBI Deputy Director Paul M. Abbate mentioned on Tuesday.
Tom Robinson, a cryptocurrency forensics specialist and the chief scientist and co-founder of Elliptic, a London-based agency that investigates crypto-based monetary crime, believes Lichtenstein and Morgan had been probably recognized by way of info federal regulation enforcement seized in 2017 from the darknet market Alphabay. As specified by the grievance in opposition to the duo, the feds adopted the cash from Alphabay to a crypto account in Lichtenstein’s identify.
“The laundering strategies used right here had been fairly refined,” Robinson, who has been monitoring the Bitfinex heist for the previous 5 years, instructed The Day by day Beast. “Nonetheless, this case demonstrates that when blockchain analytics is mixed with the type of knowledge that regulation enforcement can get their arms on, cryptocurrencies akin to Bitcoin are extremely traceable.”
Slightly over per week in the past, Elliptic noticed $3.5 billion being moved from a crypto pockets related to the 2016 Bitfinex hack to a brand new tackle. On the time of the theft, Bitfinex provided a reward as much as $400 million for the return of the stolen Bitcoin, even when they needed to pay it to the hackers themselves.
As her alter ego “Razzlekhan,” Morgan described herself as “like Genghis Khan, however with extra pizzazz.”
“Nobody is aware of for certain the place this rapper’s from—could possibly be the North African desert, the jungles of Vietnam, or one other universe,” her web site says. “All that issues is she’s right here to stay up for misfits and underdogs all over the place. (We do know that she’s descended from a nomadic tribe, although!)”
In keeping with public information, Morgan is definitely from Northern California.
Morgan, who generally shortens “Razzlekhan” to “Razz,” claims to have synesthesia, a neurological phenomenon during which individuals “see” sounds and “hear” colours. Due to this, Razz’s “artwork typically resembles one thing in between an acid journey and a pleasant nightmare,” her web site says. “Undoubtedly not for the faint of coronary heart or simply offended, Razz likes to push the bounds of what persons are comfy with. Her type has typically been described as ‘attractive horror comedy,’ due to her fondness for combining darkish and disturbing ideas with soiled jokes and gestures... Whether or not that results in one thing great or horrible is unclear; the one factor that is sure is it gained’t be boring or mediocre.”
Her lyrics embrace traces about “getting excessive within the cemetery,” including, “I really like me some grave grass.”
“Puff puff cross… Fuck the park; it’s stuffed with fuck boy intercourse slaves,” she rhymes in certainly one of her tracks. “I’m about to gentle it up; When a giant ass horse pulls up; In a darkish chocolate ‘67 Porsche; ‘How a lot for a hand job?’; Yo, I’m not some type of slutty fundamental ho; About to jack off a horse for a journey in yo po-shhhh.”
Harrisburg, Pennsylvania musician Sterling Walden, who makes use of the identify “Keyzus” professionally, produced a few of Morgan’s hip-hop tracks—and mentioned he was shocked by the fees.
“However we solely dealt on the music enterprise,” Walden instructed The Day by day Beast. “For probably the most half, every thing appeared just about common. Heather was actually an honest individual. Tremendous variety, tremendous honest in enterprise, and I by no means actually had any unhealthy ideas about her, or heard something like this. I’m nonetheless in disbelief, like, I actually don’t imagine it.”
Morgan discovered Walden on the web, he mentioned, after which she employed him to file her. She didn’t seem to have great wealth, however was as well-off “as the common tech CEO,” in accordance with Walden, who mentioned he didn’t see Morgan spending wildly or going out and “shopping for loopy stuff.”
Lichtenstein is initially from Illinois, in accordance with public information, which present members of the family spelling the identify as “Likhtenshteyn.”
In his LinkedIn bio, Lichtenstein claims to have been the co-founder and CEO of a San Francisco gross sales and advertising firm referred to as MixRank. Nonetheless, MixRank’s web site makes no point out of him. The corporate didn't instantly reply to The Day by day Beast’s request for remark.
A cat proprietor, Lichtenstein described his over-the-top proposal to Morgan as “one thing memorable that might actually present how a lot I really like and worth the true Heather, not simply the badass entrepreneur but additionally the ultra-weird inventive genius.” However he additionally knew that Morgan “would need any proposal to be pragmatic and likewise add enterprise worth,” Lichtenstein wrote on Fb.
“A plan started to type...As you might know, Heather is not only a tech entrepreneur...she can be Razzlekhan, the fearless rapper,” the submit says. “And what higher method to suggest to an entrepreneur/rapper than with a bizarre, inventive multi-channel advertising marketing campaign? Candy, considerate, inventive, constructive ROI. Excellent!”
On Monday, a dazed-seeming Morgan posted a video on social media complaining a few unhealthy expertise she had on the nail salon.
“Can I be actual with you about one thing?” she says to the digital camera, a zebra disguise seen on the wall behind her. “You understand what, I actually, actually, actually hate nail stuff. For the longest time, I solely painted one nail, my Razzle nail,” persevering with to gripe about her nails being “skinny” resulting from a manicurist who “sanded [them] down.”
The following day, she could be in handcuffs.
Michael Zweiback, a former assistant U.S. legal professional for the Central District of California who served as chief of the Division of Justice’s Cyber & Mental Property Crimes Part, instructed The Day by day Beast that the fees in opposition to Morgan and Lichtenstein are supposed to “make individuals conscious of the truth that [DOJ is] doggedly trying to pursue this explicit space” and that cryptocurrencies should not as untraceable as some imagine.
The feds at the moment are sending a message to cybercriminals that “they will’t capitalize on this and maintain their anonymity to the diploma that definitely has been publicized,” he mentioned, noting that though Bitcoin “sounds daunting,” what Morgan and Lichtenstein are accused of doing is little greater than a contemporary twist on tried and true strategies.
“I as soon as had a federal decide inform me that there’s no such factor as a brand new fraud scheme, that it’s actually all outdated schemes which are simply type of relabeled and repackaged,” Zweiback added. “Quite a lot of what’s described [in the complaint], despite the fact that it sounds very novel and new—and definitely the know-how is novel—however the strategies should not that totally different from what we skilled many years in the past, after we had been monitoring cash that was being laundered by different organized crime teams.”
It is going to be “curious,” he mentioned, to see what proof prosecutors introduce in courtroom when it comes to emails, textual content messages, and communications between Morgan and Lichtenstein and the others concerned in what Zweiback believes is “most certainly a worldwide conspiracy.”
“They definitely not solely obtained it, however they maintained management in a method that implies that there are in all probability many different people concerned on this,” he mentioned.
If convicted, Lichtenstein and Morgan face a most of 25 years in jail.
—With extra reporting by Zachary Petrizzo