Bitfinex Suspect Heather Morgan Bailed, Husband Isn't

Bitfinex Suspect Heather Morgan Bailed, Husband Isn't

Created 2yr ago, last updated 2yr ago

Both were arrested last week on suspicion of attempting to launder BTC that was stolen when Bitfinex was hacked back in 2016.

Bitfinex Suspect Heather Morgan Bailed, Husband Isn't

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A man accused of attempting to launder Bitcoin worth billions of dollars has been denied bail — but a judge has ordered that his wife should be released as they await trial.

Ilya "Dutch" Lichtenstein will now remain in custody amid concerns he is a flight risk — and prosecutors fear he has the skills and funds required to flee the U.S. ahead of any court appearance.

Heather Morgan — an amateur rapper also known as Razzlekhan — can remain at home until the trial date.

Both were arrested last week on suspicion of attempting to launder BTC that was stolen when Bitfinex was hacked back in 2016. Detectives have recovered $3.6 billion of the $4.5 billion that was missing — in what the U.S. Justice Department described as its biggest financial seizure ever.

However, there are a string of conditions to her release.

Morgan's bond has been set at $3 million with her parents' home as security, she must wear an electronic tag, and she will be given a flip phone and an internet-connected device that will be monitored. The 31-year-old has also been prohibited from making any cryptocurrency transactions.

It's likely that prosecutors will be unhappy with this outcome. In court papers submitted before the hearing, they had written:

"The offer by the defendants' parents to secure the defendants' bond with their own homes is generous, but the (unspecified) value of such property is presumably trivial in comparison to the hundreds of millions of dollars in cryptocurrency assets to which the defendants have access."

The government argued in court that many millions of dollars in illicit funds linked to the hack remain missing.

Lichtenstein was born in Russia — and prosecutors feared it would be difficult to secure extradition back to the U.S. if he traveled there.

The couple were represented by a single lawyer in court, with the judge raising concern over this arrangement. The lawyer argued that both defendants had no intention to flee — and if this had been the case, they would have escaped in the weeks before their arrest. Judge Beryl Howell was also told that they had embryos frozen in New York as they were hoping to conceive a child.

If convicted, both Lichtenstein and Morgan face up to 25 years in prison.

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A Colorful Past

Heather Morgan made headlines around the world when she was arrested last week.

The self-styled "Crocodile of Wall Street" had uploaded a series of freestyle raps to YouTube and TikTok. She had written articles for Forbes offering tips on how businesses could protect themselves from cybercriminals, and had given talks in Brooklyn on "How to Social Engineer Your Way Into Anything."

According to Elliptic, a key step in identifying the suspects was taken when the Alphabay darknet marketplace was seized and shut down by law enforcement in 2017. BTC linked to the Bitfinex hack had been sent through this platform.

Documents have also revealed the difficulties that Lichtenstein and Morgan allegedly experienced as they attempted to launder the Bitcoin. It's believed they opened seven accounts on one crypto exchange — but their access was frozen because the identities they had used could not be verified.

Bitfinex is now attempting to work with U.S. law enforcement in an attempt to regain access to the Bitcoin that was stolen six years ago. Although the exchange believes affected customers were fully reimbursed following the incident, it may still face compensation claims from users.

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