The realm of cryptocurrency has attracted all types. And as consistency would have it, the currency that has been the darling of the criminal set still attracts some of that element. They may just be getting more brazen.
The Mysterious Bitcoin Hackers, Unveiled
Take, for example, the 119,754 Bitcoin that was stolen from the Hong Kong exchange Bitfinex in 2016. At the time of the hack, the coin was worth $71 million. But Bitcoin trades are visible, which meant that moving it risked revealing who had perpetrated the theft. During the six years it sat there, it became worth $4 billion as only tiny bits would move mysteriously in a flurry of complicated transactions. The bulk remained quiet and unmoving.
Suddenly, this month there was movement. But not the movement of sinister hackers finally transacting their billions. The movement was a government seizure as part of an investigation into a New York City couple.
Ilya Lichtenstein and his wife Heather Morgan were arrested and charged with conspiring to launder billions of dollars in Bitcoin. Over the time in their control, they siphoned off small bits, hiding their stash in a complicated network of digital wallets.
Criminal Complaint Against Lichtenstein and Morgan
According to the criminal complaint, Lichtenstein and Morgan used multiple fictitious identities to set up online accounts. They then utilized well-known laundering techniques and programs, enabling them to automate numerous transitions in a small amount of time, and depositing them in various exchanges and darknet markets from which they would withdraw their funds.
After search warrants were executed, special agents were able to obtain files in an online account controlled by Lichtenstein. These contained the keys necessary to access digital wallets that led directly to the funds stolen from Bitfinex. At seizure, the recovered Bitcoin was valued at $3.6 billion.
The Odd Alter Ego of a Bitcoin Hacker
In the midst of the intrigue, the couple lived lavish lifestyles, and Morgan even took on an alternate rapping persona named Razzlekhan, self-dubbed the “crocodile of Wall Street.” She was a contributor to Inc. and Forbes, writing about cybercriminals and how to protect your business.
The couple had set up accounts in Russia and Ukraine and appeared to be working toward moving until COVID hit. Lichtenstein has dual citizenship in both the U.S. and Russia. Before their illustrious criminal career, however, they were merely a couple of tech entrepreneurs. If convicted of this and a second conspiracy count, they could face up to 25 years in prison.
One For the Government, Zero For Crypto Legitimacy
While industry associations are working hard to legitimize cryptocurrency markets, this arrest merely supports the opinion of many traditional investors that the crypto community is still populated by a criminal element and fringe characters. In the meantime, the FBI has used this arrest to bolster its reputation for being able to follow digital trails to bring justice to those who exploit the financial market, primarily the cryptocurrency one.
Cryptocurrency keeps trying to make strides toward greater legitimacy, but it still attracts those looking for the quick buck, often at the expense of the unsuspecting. If you are an investor or operate a crypto business, it’s critical to keep knowledgeable and protected. Regulations are in constant flux and crypto still offers a significant risk for an uneducated investor.
If you have questions about cryptocurrency and how it may apply to your situation, contact Foresightrefund to discuss the potential benefits and pitfalls of crypto investment.