In June of 2020, Heather Morgan wrote a column for Forbes that was headlined, “Consultants Share Suggestions To Shield Your Enterprise From Cybercriminals”. Now US authorities are alleging she was extra of an professional than she let on.

On Tuesday, the entrepreneur and budding rapper was arrested and charged with trying to launder greater than $3.6bn in stolen Bitcoin together with her husband, Ilya Lichtenstein, because the US authorities took management of $3.6bn of Bitcoin — the biggest monetary seizure within the historical past of the Division of Justice.

The DoJ accused the couple, who are actually in custody, of using a “sophisticated cash laundering course of” — however didn’t attempt to tie them to the precise theft — in a 20-page court filing outlining the allegations in opposition to them.

Samson Enzer, the lawyer for the couple, argued in a submitting on Wednesday there are “vital holes within the authorities’s case in opposition to them”.

Its shiny move charts can’t masks the various deficiencies within the authorities’s proof and unsupported, conclusory leaps,” added Enzer, who didn’t reply to requests for additional remark.

Since their arrest on costs of conspiracy to commit cash laundering and to defraud the US, hypothesis has swirled round Morgan, 31 and Lichtenstein, 34, who led vibrant on-line lives whereas allegedly sitting on a fortune of stolen cryptocurrency for greater than 5 years.

On this courtroom sketch, lawyer Sam Enzer sits between Heather Morgan, left, and her husband, Ilya “Dutch” Lichtenstein © AP

In 2016, unidentified thieves made off with 19,754 Bitcoin, practically 1 per cent of the cryptocurrency then in circulation. Since then, its worth has ballooned from $71mn to greater than $4.5bn immediately.

The DoJ alleges that the couple transformed about $2.9mn of Bitcoin into fiat forex. However authorities stated greater than 80 per cent of the stolen crypto remained untouched in accounts related to Morgan and Lichtenstein, who describes himself as a tech entrepreneur.

The federal government’s particular cash laundering allegations contain comparatively small sums, together with the acquisition of a $500 Walmart present card. The couple additionally allegedly purchased present playing cards for Uber, Resorts.com and PlayStation.

The sheer dimension of the heist would have been problematic for whoever masterminded it. “If that they had stolen 500 bitcoin, nobody would have bothered looking for them, however this was the heist of the century,” stated Frank Weert, the co-founder of Whale Alert, a blockchain monitoring and analytics firm. “It [would be] mindbogglingly silly to steal this a lot bitcoin.”

Morgan is a self-described “serial entrepreneur, [software] investor, and surrealist artist/rapper”. Along with her common columns for Forbes she additionally wrote for Inc journal on matters starting from management abilities to “snake dealing with strategies that will help you cope with stress”.

Her Forbes writer bio learn: “When she’s not reverse-engineering black markets to think about higher methods to fight fraud and cyber crime, she enjoys rapping and designing streetwear trend.”

A budding rap artist, Morgan’s lamé-clad rapper “alter ego” Razzlekhan sang on YouTube in regards to the US healthcare system, entrepreneurship and a gynaecological situation referred to as endometriosis. She described herself as having a “hacker mindset”, and rapped that “blindly following guidelines is for fools”.

Lichtenstein was a faithful fan. His marriage proposal to Morgan in 2019 concerned him shopping for a number of Razzlekhan billboards in New York’s Occasions Sq.. Lichtenstein wrote on Fb that his fiancée’s rapper persona was “surreal, mysterious, creepy and attractive . . . horrifying sufficient to seize consideration, and engaging sufficient so you’ll be able to’t look away”.

The cash laundering allegations focus totally on Lichtenstein, who’s a twin citizen of the US and Russia, although he led a extra subdued life on the web. “Her rap is overshadowing his rap sheet,” stated Nicholas Weaver, a lecturer on the College of California at Berkeley college of laptop science.

Lichtenstein based an organization referred to as EndPass in 2018, which was described as “a blockchain start-up fixing issues in decentralised identification and authentication”. Extra lately, he has run an angel funding agency referred to as Demandpath, in line with his LinkedIn profile.

In pictures on social media, their decrease Manhattan condominium, which they seem to lease, was cluttered with cat toys, work-from-home set-ups and train tools. The couple have a Bengal cat named Clarissa, which they walked on a leash. Morgan labored and made YouTube movies about entrepreneurship, juicing and prosthetic eyeballs at a small desk adorned with collages of postcards, and forex from Kazakhstan and Vietnam.

Their lawyer argued in court docket paperwork in search of bail that they weren’t a flight danger as a result of their frozen embryos had been at a New York hospital. “The couple would by no means flee from the nation on the danger of shedding entry to their means to have youngsters, which they had been discussing having this 12 months till their lives had been disrupted by their arrests,” Enzer wrote.

He additionally stated the couple had been conscious they had been beneath investigation since November and had complied with authorities for the reason that DoJ searched their condominium in January 5, seizing journey paperwork and computer systems.

The DoJ alleges these searches had been fruitful — and vibrant. It alleges that codes for the lacking Bitcoin had been present in a file in Lichtenstein’s cloud account, which “contained a listing of two,000 digital forex addresses . . . virtually all of [which] had been immediately linked to the hack”.

One digital doc, labelled “passport concepts”, included hyperlinks to darknet distributors that the DoJ stated appeared to promote false identification. One other contained the identify of a Russian financial institution that one member of the couple had dubbed “sketchy Russian oligarch financial institution”. Lichtenstein’s cloud storage allegedly contained a folder labelled “personas” with false identification paperwork.

“Being good under no circumstances stops you from being silly,” stated David Gerard, writer of Assault of the 50-foot Blockchain. He stated that bitcoin was more durable to launder than different cryptocurrency as a result of it’s extra simply traced on blockchain.

The DoJ alleges that the couple generally used their actual names and addresses when creating accounts on regulated exchanges that had been later used to purchase gold with bitcoin. Weaver stated that in an investigation of this nature: “One mistake turns into the breadcrumbs that may be adopted”.

On her web site, Razzlekhan, who referred to as herself the “Crocodile of Wall Avenue”, wrote that she was at all times pushing the boundaries of what’s attainable. “Whether or not that results in one thing great or horrible is unclear; the one factor that’s sure is it received’t be boring or mediocre”.

Source: DUK Information

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