Tuesday’s announcement by the Department of Justice – that it had seized some $3.6 billion previously stolen from crypto exchange Bitfinex in 2016 – created an inevitable source of interest around the two people accused of having laundered these funds as a result of the theft.
Ilya Lichtenstein and Heather Morgan were arrested in Manhattan earlier today and face up to 25 years in prison if convicted on the double count of conspiracy to launder money and conspiracy to to defraud the United States.
Predictably, journalists and commentators dug into the social media footprints of the two defendants, with some pointing to intersections between their public activities and the crypto industry.
What emerges is a portrait of two tech entrepreneurs — and, in Morgan’s case, a former rap career — who almost denies DOJ allegations of a years-long effort to launder tens of thousands of bitcoins stolen from Bitfinex.
Morgan’s LinkedIn account identifies her as a columnist for Inc. and Forbes, the latter of which has published a series of articles, the most recent coming out in September. Of particular note, as commenters on social media point out, is an article titled “Experts share tips to protect your business from cybercriminals.” The article included comments from executives of crypto firms BitFlyer and BitGo, the latter providing Bitfinex with multi-signature security tools at the time of the hack.
Much of the content seems geared towards advice and tips for millennial entrepreneurs. Earlier Tuesday, Gauntlet founder Tarun Chitra shared on Twitter that Morgan gave a lecture in 2019 on “How to Social Engineering Your Way to Anything.”
Morgan’s LinkedIn account identifies her as the CEO of a professional email writing service called SalesFolk since 2009 and an investor in a company called Demandpath since June 2018. She is a graduate of the University of California, Davis and the American University in Cairo.
Lichtenstein’s own LinkedIn account lists him as a partner of Demandpath since June 2018 and an advisor to SalesFolk since February 2014. Demandpath is described as “a boutique micro-fund investing in the next generation of promising technologies” on its website. Through LinkedIn, he earned a degree in psychology from the University of Wisconsin-Madison.
According to a Facebook post authored by Lichtenstein, the two got engaged in June 2019. The two then married last fall, which Morgan described on Instagram as “surreal.”
What the DOJ observed
According to the DOJ’s allegations in a statement of facts filed in court, occurring in the context of these activities was a years-long effort to collect some of the stolen funds, efforts that sometimes appear to have been thwarted by knowledge of your customer. checks on some of the unidentified crypto exchanges and financial institutions they interacted with.
Yet, according to the DOJ, “[r]Documents obtained from other VCEs and mainstream financial institutions revealed that MORGAN and LICHTENSTEIN made similar misleading claims to other financial institutions during their conspiracy.”
The DOJ alleged that the couple managed to cash out some of the funds, with spending in gold and non-fungible tokens (NFTs). According to court documents, funds were also spent on a Wal-Mart gift card as well as payments to Uber and Hotels.com.
As crypto-analytics firm Elliptic noted, it was the post-hack decision to later route those funds through the now-defunct black market AlphaBay — later seized by federal investigators — that provided the link between the funds and an account in the name of Lichtenstein.
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