They are, to hear the feds tell it, a Bonnie and Clyde for the crypto age—made-for-TikTok personalities who broke bad, glamorously, right before their followers’ eyes.
She billed herself as “The Crocodile of Wall Street” and “Razzlekhan,” a surrealist artist and rapper with tattooed hands and, she boasted, more pizzazz than Genghis Khan.
He assumed a tamer persona: that of a “tech entrepreneur” and “occasional magician” who’d proposed, in a social media moment, via flashing billboards in Times Square.
At 7 a.m. on Tuesday, their blingy world of TED talk-style salons and music videos collapsed around them when they were arrested by federal law enforcement officials in New York City and accused of a crime that would’ve seemed preposterous in a halcyon, pre-cryptocurrency era: enriching themselves off a cache of stolen Bitcoin that is today worth about $4.5 billion.
Heather Morgan, 31, and her husband Ilya Lichtenstein, 34, were detained on charges of conspiring to launder 119,754 Bitcoin. The digital currency, the authorities say, came from the 2016 hack of Bitfinex, a cryptocurrency exchange owned and operated by iFinex Inc.
TODAY!!! TODAY!! Versace Bedouin is finally out on Youtube!
Click here and be dazzled! https://t.co/VsaBuijafU#CEO #femalerapper #VersaceBedouin #entrepreneur #WallStreet #musicvideo pic.twitter.com/x8FgsA9tac
—Heather R Morgan (rzk.eth) (@HeatherReyhan) July 16, 2019
At an initial appearance in a Manhattan federal court on Tuesday evening, Morgan wore a white hooded sweatshirt, her long hair down. Lichtenstein, who goes by the nickname “Dutch,” showed up wearing jeans and a gray shirt. Neither wore shackles nor spoke publicly. Their lawyers—they have retained separate counsel—did the talking. The trial will eventually be held in Washington.
The judge granted both bail, setting a bond of $3 million for Morgan and asking her parents to post their home as security. For Lichtenstein, the amount was $5 million. The government initially asked the judge not to allow them to be released on bail. Each is facing the possibility of a 20-year prison sentence, so they have the motivation to run, a prosecutor told the judge.
Overnight, a judge in Washington granted an emergency request by the U.S. government to hold the couple in jail ahead of their trial. “The defendants are sophisticated cyber criminals and money launderers who present a serious risk of flight,” prosecutors said. While the majority of the stolen funds have been seized, Morgan and Lichtenstein control several other virtual currency addresses that hold about 7,506 Bitcoin, valued at more than $328 million, the government says.
None of this could have happened 20 years ago. Or 10. Or maybe even five. The couple’s audacious plan, as laid out by federal authorities, as well as the brazen lifestyle that plan supposedly afforded, seemed tailored to these times, and these times alone.
The Department of Justice says that the Bitcoin stolen during the 2016 hack was sent to a digital wallet controlled by Lichtenstein and then to one the couple controlled via a complex laundering scheme. The cryptocurrency was worth $71 million when it was spirited away in 2016. Now the stash is worth $4.5 billion as Bitcoin prices have skyrocketed, of which $3.6 billion worth of tokens has been recovered by federal agents. The couple weren’t accused of doing the actual hacking.