In 2016, one of the biggest digital heists in world history took place. But even more startling than the theft itself was the aftermath, when investigators were led to the door of a glamorous young couple in New York. Could they really be the Bonnie and Clyde of crypto?
Making off with millions
The financial world was rocked in August 2016 when hackers stormed the digital gates of Bitfinex, a massive cryptocurrency exchange based in Hong Kong. Deploying malware to breach the platform, the culprits cleverly raised the daily withdrawal limit and made thousands of unauthorised transactions, siphoning off almost 120,000 Bitcoins from members’ accounts.
This was a truly massive haul, worth around $72 million and causing the market value of Bitcoin to dramatically plummet. It happened just over a year after Bitfinex had overhauled its security protocols, and there was immediate speculation over whether it had been an inside job. Posting on an online forum, Bitfinex’s Director of Community and Product Development stressed that he was ‘nearly 100 percent certain’ that nobody working at the exchange was involved.
A very hot haul
Whoever was behind the hack, they had a problem on their hands: what do to with that much stolen cryptocurrency. While the identities of the robbers remained hidden, the Bitcoins themselves were known to be stashed in a particular digital wallet. Actually spending the money was hard, since reputable exchanges and businesses would not accept Bitcoins from the heist.
In early 2017, a portion of the stolen currency began featuring in transactions at AlphaBay, a kind of illicit, dark web version of eBay. AlphaBay had no qualms about taking stolen funds. After all, this was a sprawling supermarket for criminals, selling everything from drugs to firearms. It was also an ideal conduit for money launderers, who could wipe clean the dodgy provenance of stolen or illicit coins by running them through AlphaBay.
Whoever had access to the Bitfinex haul was clearly attempting to do exactly this. Shortly afterwards, a separate criminal investigation led to AlphaBay being shut down, and the Bitfinex haul then started to be funnelled through another dark web marketplace called Hydra. However, whoever it was who was controlling the Bitfinex money had already exposed themselves to investigators.
It’s alleged that the takedown of AlphaBay had given US federal agents access to transaction logs which finally revealed the identity of the Bitfinex money launderers. After painstaking work following the culprits’ labyrinthine crypto transactions, investigators finally obtained a warrant for a rather surprising location: a plush apartment in Wall Street, the very heart of American finance.
The magician and the crocodile
Living in the Wall Street pad were a married couple: 34-year-old Ilya Lichtenstein and 31-year-old Heather Morgan. At the time of their arrest in February 2022, the Bitfinex haul allegedly in their possession had appreciated in value to around $4.5 billion, which would make Lichtenstein and Morgan some of the wealthiest miscreants on the planet.
Not only did they not look like international criminals, they also didn’t fit the stereotype of esoteric crypto nerds working away in the shadows. Ilya Lichtenstein, a Russian-born tech entrepreneur, had originally made a small fortune from affiliate marketing and described himself as a ‘human angel investor’ and ‘occasional magician’. He often appeared in TikTok videos and his cat had her own Instagram account.
Even more flamboyant was Heather Morgan, an email marketing entrepreneur who dubbed herself the ‘Crocodile of Wall Street’ and wrote articles in industry journals with titles like ‘Use These 3 Things to Run Your Life like a Boss CEO’ and ‘Why Being Perfect Will Actually Screw You Over’.
She was also a budding hip hop artist who performed under the name Razzlekhan (‘like Genghis Khan, but with more pizzazz’) and was seemingly immune to cringe. One of her music videos, for a track called Versace Bedouin, saw Morgan decked out in a gold jacket and baseball cap reading ‘0FCKS’, strutting down Wall Street and rapping out lyrics like ‘I’m many things / A rapper, an economist, a journalist / A writer, a CEO / And a dirty, dirty, dirty, dirty, h**.’
The couple had seemingly been slowly spending their ill-gotten fortune on everything from Walmart gift cards to an ostentatious wedding party in a West Coast mansion (which puzzled friends who couldn’t fathom how they could afford it). Investigators believe that at the time of the bust, the couple had been poised to flee the United States and possibly set up new lives in Russia or Ukraine, where they could sit back and launder their billions at their leisure. They had been exposed just in time.
Bitcoin Bonnie and Crypto Clyde
While Lichtenstein and Morgan have not been accused of perpetrating the heist itself, their alleged laundering of an eye-watering treasure trove of stolen funds has led to them being nicknamed ‘Bitcoin Bonnie and Crypto Clyde’.
The couple are currently awaiting trial, though they now inhabit very different worlds. Given Lichtenstein’s Russian connections, he was categorised as a flight risk by a judge and ordered to remain in custody. Morgan, on the other hand, was granted bail and has been under house arrest ever since.
That said, it was reported in early 2023 that she had been granted the freedom to take on a part-time job at a New York tech company as a ‘growth marketing and business development specialist’. Given that she and Lichtenstein face up to 25 years in prison if they’re found guilty, this may be the last time the Crocodile of Wall Street will be seen in the wild for quite some time.
