Come for the cringe-rap, stay for the buried gold coins.
The so-called Hipster Crypto Couple admitted Thursday to pulling off the largest cryptocurrency heist in history, making off with some $4.5 billion.
Ilya “Dutch” Lichtenstein, 35, pleaded guilty to conspiracy to commit money laundering, a federal count carrying up to 20 years in prison, according to the Department of Justice. His wife, 33-year-old aspiring rapper Heather “Razzlekhan” Morgan, pleaded guilty to one count of money laundering conspiracy and one count of conspiracy to defraud the United States, each of which carries a maximum term of five years behind bars.
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The pair were arrested last year on charges related to the 2016 hack of Bitfinex, a Hong Kong-based cryptocurrency exchange. Roughly 120,000 Bitcoin had been stolen; the feds were able to recover about 95,000 of those, worth about $3.6 billion. Since then, the government has been able to seize another $475 million.
Although Lichtenstein and Morgan were not charged with the actual hack, prosecutors said Thursday that Lichtenstein “used a number of advanced hacking tools and techniques to gain access to Bitfinex’s network.”
“Once inside their systems, Lichtenstein fraudulently authorized more than 2,000 transactions in which 119,754 bitcoin was transferred from Bitfinex to a cryptocurrency wallet in Lichtenstein’s control,” the DOJ said. “Lichtenstein then took steps to cover his tracks by going back into Bitfinex’s network and deleting access credentials and other log files that may have given him away to law enforcement.”
The original hacker had not been publicly identified until Thursday’s plea hearing.
Lichtenstein enlisted the help of his wife to launder the stolen funds, the feds said. Together, they used fictitious identities and automated computer programs to hide the loot, and in at least one instance, went decidedly low-tech: they duo exchanged “a portion of the stolen funds into gold coins, which Morgan then concealed by burying them.”
Aside from gold, the pair also spent the stolen funds on new, faddish items like NFTs, as well as “mundane things such as purchasing a Walmart gift card for $500,” according to court filings.
Morgan once cut a flamboyant—if not necessarily well-known—profile around New York City, describing her “Razzlekhan” persona as “like Genghis Khan, but with more pizzazz.” Part of Lichtenstein’s over-the-top marriage proposal to Morgan in June 2019 featured billboards in Times Square promoting her self-released album as, highly dubiously, “the most brutally honest rap album of the year.”
Her lyrics included lines about “getting high in the cemetery,” with Morgan rapping, “I love me some grave grass.”
“Puff puff pass… Fuck the park; it’s full of fuck boy sex slaves,” she rhymed. “I’m about to light it up; When a big ass horse pulls up; In a dark chocolate ‘67 Porsche; ‘How much for a hand job?’; Yo, I’m not some kind of slutty basic ho; About to jack off a horse for a ride in yo po-shhhh.”
Lichtenstein described his over-the-top proposal to Morgan as “something memorable that would really show how much I love and value the real Heather, not just the badass entrepreneur but also the ultra-weird creative genius.” But he also knew that Morgan “would want any proposal to be pragmatic and also add business value,” Lichtenstein wrote on Facebook.
“A plan began to form...As you may know, Heather is not just a tech entrepreneur...she is also Razzlekhan, the fearless rapper,” the post said. “And what better way to propose to an entrepreneur/rapper than with a weird, creative multi-channel marketing campaign? Sweet, thoughtful, creative, positive ROI. Perfect!”
When Morgan and Lichtenstein got engaged, Morgan hired a professional photographer to document the occasion.
The photographer, who asked to remain anonymous, previously told The Daily Beast that Morgan often referred to herself in the third person. She requested pictures of the proposal, saying she was “flashy and colorful,” while Lichtenstein was “into gray and black and some leather and goth ninja,” according to the photographer, who asked not to be named.
The pair wanted photos of “Dutch and all his wives,” namely, Photoshopped pictures of Lichtenstein and Morgan “as Razzlekhan with multiple personas.” The job never came to fruition, according to the photographer, who turned down the project because he said he was very busy at the time, but also that the project “sounded exhausting.”
Morgan has in the past been part of the Forbes contributor network, in one article advising burnt-out execs to “try rapping” in order to get motivated again.
The two were known to walk their cat on a leash near their apartment on Wall Street.
In court filings, prosecutors laid out how Lichtenstein and Morgan hoodwinked a variety of financial services firms, claiming the source of their deposits was aboveboard when in fact the opposite was true. One account they had was made up entirely of funds transferred from another account containing pilfered Bitcoin, according to prosecutors.
“The only other significant deposit to the account was an approximately $11,000 U.S. Small Business Administration Paycheck Protection Program (PPP) loan advance provided in response to the COVID-19 crisis,” the complaint against Lichtenstein and Morgan states.
Henna artist Natalia Zamparini told The Daily Beast that Morgan was a client of hers for “many years” and that she “truly enjoyed working with her.” When she first heard about the arrest, Zamparini said she was “in shock... because I never would have suspected anything like this from either of them. They were very nice, and lived in a nice area, but humble people.”
The court documents described a complex investigation by federal law enforcement agencies including the IRS, FBI, and the Department of Homeland Security. During a search of the pair’s home the month before their arrest, Morgan tried to lock her phone before FBI agents could review it, according to court records.
After Lichtenstein and Morgan were taken into custody, agents said they discovered a raft of suspicious items in their place, such as books with secret compartments hollowed out of the pages and identification documents in other people’s names. However, defense lawyers said the couple had no intention of fleeing, as the two desperately wanted to have access to “several” embryos they “previously froze at a hospital in New York in anticipation of starting a family together.”
A sentencing date has not yet been set.
