Ilya “Dutch” Lichtenstein, 35, made that bombshell admission while pleading guilty to laundering the stolen bitcoin in Washington, D.C., federal court.
The plea came before his wife, 33-year-old Heather Rhiannon Morgan, who was in the audience, stepped up to enter her own guilty plea to two charges, money laundering conspiracy and conspiracy to defraud the United States government.
Until Thursday’s admission in court by Lichtenstein, it was not publicly known who had hacked the bitcoin from the cryptocurrency exchange Bitfinex.
The couple was not charged in the hack itself.
Lichtenstein faces a maximum possible sentence of 20 years in prison for one count of conspiracy to commit money laundering.
The Russian emigre, has been held without bond since his arrest after a judge ruled he is a flight risk, will remain jailed until his sentencing, and has agreed to cooperate with federal investigators.
Morgan, an aspiring rapper known as “Razzlekhan” and “The Crocodile of Wall Street,” faces a maximum possible sentence of five years in prison.
She was in the courtroom for her husband’s plea hearing. Morgan has been free on $3 million bond since her arrest.
Lichtenstein smiled at her and blew her a kiss during their moment of eye contact, the first time they had seen each other in more than a year.
When they were arrested in February 2022, the Department of Justice said officials had seized more than 94,000 bitcoin of the more than 119,000 hacked bitcoin. The seized cryptocurrency at the time was worth about $3.6 billion, making it the largest seizure in DOJ history.
“Since their arrests, the government has seized another approximately $475 million tied to the hack,” the DOJ said in a press statement Thursday.
Bitfinex in a statement said, “Following the August 2016 hack, Bitfinex engaged in unprecedented efforts to make its customers whole.”
“Bitfinex also diligently worked with the U.S. Department of Justice to identify the perpetrators of the hack, recover the stolen bitcoin, and bring the hackers to justice,” the company said. “After seven years, those efforts have come to fruition.”
When the bitcoin was stolen, it was worth just $70 million.
But its value soared over the years to $4.5 billion.
In its statement Thursday, the DOJ said, “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 DOJ said. “Following the hack, Lichtenstein enlisted the help of his wife, Morgan, in laundering the stolen funds.”
When the couple was arrested in early 2022, the department said about “25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan.”
During Lichtenstein’s plea hearing, it was revealed that he had converted some assets to gold coins, and that Morgan had buried gold coins at a location now known to law enforcement officials.
And it also was revealed that Lichtenstein’s past travel to Ukraine and Kazakhstan was done to convert digital assets to cash through Russian and Ukrainian middlemen. That cash was then shipped to addresses in Russia and Ukraine, where Lichtenstein picked it up physically and deposited it into U.S. accounts so he could retrieve it while in New York City.
The Crypto Couple’s separate plea hearings were moved up from their originally scheduled times Thursday due to arraignment later in the afternoon at the same courthouse of Donald Trump. The former president was charged Thursday in that case with crimes related to an effort to overturn his 2020 election loss.
A charging document filed last month against the couple says that in early 2107 Lichtenstein “began to move a portion of the bitcoin” stolen in the hack “in a series of small, complex transactions across multiple accounts and platforms.”
This shuffling, which created a voluminous number of transactions, was designed to conceal the path of the stolen funds,” according to that filing by the U.S. Attorney’s Office for the District of Columbia.
Prosecutors wrote that in February 2018, Lichtenstein and Morgan established an account at a U.S. financial institution for their company, Endpass, “and in doing so, represented to [that institution] that the primary payments into the account would be from software-as-a-service customer payments.”
“In actuality, Lichtenstein and Morgan used the account to launder proceeds of the hack of” Bitfinex, the filing charges.
On the heels of their arrests last year, Netflix said it had commissioned a series on the couple.
— Eamon Javers reported from Washington, D.C., and Dan Mangan reported from Natick, Massachusetts.
Correction: Morgan is an aspiring rapper known as “Razzlekhan.” An earlier version misspelled her stage name.