$3.6B in stolen bitcoin has been recovered in a raid in New York, and two suspects, Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, have been arrested. They are accused of stealing 119,754 bitcoins from the Bitfinex virtual currency exchange in 2016. At the time, the bitcoins were valued at almost $72M. Today, they would be worth almost $4.5B.
The raid has resulted in 94,000 bitcoins being recovered. The rest are believed to have been laundered by Lichtenstein and Morgan. According to court documents, some of that money has been deposited into financial accounts controlled by the defendants. Whether those monies will eventually be recovered is not clear.
It seems that the defendants kept an account of the bitcoins, the wallets they were in and the passphrases in a spreadsheet. They stored that in a cloud storage service. A warrant was granted for access to the cloud service, and the spreadsheet was recovered.
Deputy Attorney General Lisa O Monaco said, “Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals.
“In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”
Who are Lichtenstein and Morgan?
A search of the internet throws up some interesting facts about the two accused. Both, it seems, were successful before 2016. Since then, they have turned into serious entrepreneurs. That is something that investigators will look at closely to see if they used their investments to launder money.
Lichtenstein’s LinkedIn profile shows him to be a tech entrepreneur turned angel investor. By 2016, he had been the founder and co-founder of several businesses. He was also working for a VC firm, 500 Global, as a mentor.
Post-2016, he continued that work and, with Morgan, set up an investment company called demandpath. Oddly, the company website doesn’t list any businesses that demandpath has invested in. The question for some of those startups he helped will be, did we get stolen money?
Morgan is a very different and much more high profile individual. Her LinkedIn profile shows that she and Lichtenstein worked together at SalesFolk. They also continued to work together post the Bitfinex heist at Enpass, where Morgan was CEO, and at demandpath.
Morgan was a regular columnist for Forbes, where she is described as “an international economist, serial entrepreneur and investor in B2B software companies.” Again, any of her investments post 2016 will have to be looked at closely to see where the money came from. In an interesting twist, Morgan also has a rapper alter ego called Razzlekhan.
Enterprise Times: What does this mean?
There is a long way from being indicted to going to jail. However, it doesn’t look good for either defendant, given they laundered the money and had the access codes for all the wallets. On that latter point, storing that sort of sensitive information in an unencrypted spreadsheet is naive. It’s not what you would expect from tech entrepreneurs and certainly not from two people involved in digital identities.
Interestingly, the court documents don’t allege that they carried out the theft, just that they laundered the money. Is there is a third party out there who has yet to be arrested or identified? Perhaps we will find out during the court case.
Either way, Bitfinex will be looking forward to a long-overdue payday when the case concludes, and the seized bitcoin are returned.
